Capital One Produces a Single Product, Which It Sells for $8.00

question 116

Multiple Choice

Capital One produces a single product, which it sells for $8.00 per unit. Variable costs per unit equal $3.20. The company expects short-term fixed costs to be $7,200 for the coming month, at the projected sales level of 20,000 units. Management is considering several alternative actions designed to improve operating results. In conjunction with this, they have created a profit-planning (that is, a CVP) model, which can be used to evaluate different scenarios.

What is Capital One's current break-even point in terms of number of units for the month?

• A) 1,500 units.
• B) 2,250 units.
• C) 3,330 units.
• D) 4,000 units.

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Definitions:

Symbolically

In a manner that uses symbols or is representative of larger concepts or ideas, often carrying deeper meanings.

Organisational Pyramid

A hierarchical structure of an organization that illustrates the ranking of positions and the flow of authority from the top (executives) to the bottom (entry-level positions).

Teamwork

The collaborative effort of a group to achieve a common goal or complete a task in the most effective and efficient way.

Upside-Down Pyramid

The upside-down pyramid puts customers at the top; served by workers whose managers support them.