Spencer Tools Would Like to Offer a Special Product to Its

question 48

Multiple Choice

Spencer Tools would like to offer a special product to its best customers.However,the firm wants to limit its maximum potential loss on this product to the firm's initial investment in the project.The fixed costs are estimated at $21,000,the depreciation expense is $11,000,and the contribution margin per unit is $12.50.What is the minimum number of units the firm should pre-sell to ensure its potential loss does not exceed the desired level?

• A)1,220 units
• B)1,680 units
• C)2,215 units
• D)2,560 units
• E)2,750 units

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Definitions:

Tourist Expenditures

Amount of money spent by visitors in a country on accommodation, food, transportation, entertainment, and other services and goods.

Unilateral Transfers

Financial flows from one country to another that do not require repayment, such as foreign aid or remittances.

Balance of Payments

A record of all economic transactions between the residents of a country and the rest of the world within a certain period.

Exports

Products or services transferred from one nation to another for the purpose of sale or exchange.