A Company That Produces Baseball Caps Has Fixed Costs of $100,000,total

question 91

Multiple Choice

A company that produces baseball caps has fixed costs of $100,000,total variable costs of $40,000 for a production volume of 20,000 units.The average variable cost per unit is:

• A) $5.00.
• B) $2.50.
• C) $0.20.
• D) $0.40.
• E) $2.00.

---

Definitions:

360-Day Year

A financial convention that simplifies the calculation of interest by assuming a year has 360 days.

Retail Gift Stores

Commercial establishments focusing on selling various gift items including souvenirs, handmade crafts, and other unique products to customers.

Ordinary Simple Interest

Interest calculated on the principal amount of a loan or investment, based on a 360-day year.

Ordinary Simple Interest

A method for calculating the interest charge on a loan or investment based on the original principal, rate, and length of time, without compounding.