Peddlin' Pete's Cycles Sells Its Entry-Level Bicycles for $400 Each

question 27

Multiple Choice

Peddlin' Pete's Cycles sells its entry-level bicycles for $400 each.Its variable cost is $250 per bicycle.Fixed costs are $35,000 per month for volumes up to 1,200 bicycles.Above 1,200 bicycles,monthly fixed costs are $55,000.What is the budgeted operating income at a level of 900 bicycles per month?

• A)$100,000
• B)$135,000
• C)$325,000
• D)$80,000

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Definitions:

Safety Hazard

A condition in the workplace or environment that has the potential to cause harm or injury to people.

Market Equilibrium

A condition where the quantity of a good or service supplied equals the quantity demanded, leading to no upward or downward pressure on price.

Inefficient

A situation where resources are not used in the most effective way, leading to potential waste or lost opportunities.

Externalities

Costs or benefits of a market activity borne by a third party; externalities can be either positive or negative.