A Company Has Sales of $87,500 at the Break-Even Point

question 23

Multiple Choice

A company has sales of $87,500 at the break-even point and fixed costs are $35,000.Assuming cost behaviour does not change if sales increase by $20,000 how much will operating income will increase by?

• A) $20,000.00.
• B) $12,000.00.
• C) $8,000.00.
• D) $4,000.00.

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Definitions:

Cars

Motor vehicles with four wheels designed primarily for passenger transportation and commonly powered by internal combustion engines.

Absolute Advantage

The ability of an individual, company, or country to produce a good or service more efficiently than competitors, using fewer resources.

Lumber

Lumber that has been manufactured into planks and beams, marking a step in the journey of producing wood products.

Comparative Advantage

The ability of an individual, company, or country to produce a particular good or service at a lower opportunity cost than others.