Musgrave Corporation Has Fixed Operating Costs of $46,000 and Variable

question 62

Multiple Choice

Musgrave Corporation has fixed operating costs of $46,000 and variable costs that are 30% of the current sales price of $2.15.At a price of $2.15,Musgrave sells 40,000 units.Musgrave can increase sales by 10,000 units by cutting its unit price from $2.15 to $1.95,but variable cost per unit won't change.Should it cut its price?

• A) No,EBIT decreases by $6,000.
• B) No,EBIT decreases by $250.
• C) Yes,EBIT increases by $11,500.
• D) Yes,EBIT increases by $8,050.
• E) Yes,EBIT increases by $5,050.

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Definitions:

Cellular Injury

Damage to cells that can be caused by a wide range of factors including chemicals, lack of oxygen, or physical trauma.

Urinary Output

The measurement of the volume of urine produced by the kidneys over a specific period of time, an indicator of kidney function and hydration status.

Parathyroid Hormone

A hormone produced by the parathyroid glands that helps regulate calcium levels in the blood.

Serum

Fluid portion of blood after the removal of fibrin and blood cells.