In 2008, Precision Pattern Interiors, Which Makes High-End Aircraft Interiors

question 372

Multiple Choice

In 2008, Precision Pattern Interiors, which makes high-end aircraft interiors, began a $1 million renovation of a building at the Hutchinson Air Base Industrial Tract south of Yoder, Kansas. The company will also add some $400,000 in new equipment and triple its Yoder work force. Which of Precision Pattern Interiors' decisions is a long run decision?

• A) $1 million renovation of a building at the Hutchinson Air Base Industrial Tract and $400,000 in new equipment purchases
• B) $1 million renovation of a building at the Hutchinson Air Base Industrial Tract
• C) $400,000 in new equipment purchases
• D) triple its Yoder work force

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Definitions:

Break-Even Point

The point at which total costs equal total revenues, indicating that a business is neither making a profit nor incurring a loss.

Contribution Margin Ratio

The contribution margin ratio is a financial metric indicating the proportion of sales revenue that exceeds variable costs and is available to cover fixed costs and generate profit.

Fixed Costs

Outlays for rent, salaries, and insurance that are unaffected by variations in the volume of production or sales.

Sales Dollars

A term referring to the total revenue generated from the sale of goods or services, expressed in monetary value.