Dodero Company Produces a Single Product That Sells for $100

question 103

Multiple Choice

Dodero Company produces a single product that sells for $100 per unit.Fixed expenses total $12,000 per month,and variable expenses are $60 per unit.The company's sales average 500 units per month.Which of the following statements is correct?

• A) The company's break-even point is $12,000 per month.
• B) The fixed expenses remain constant at $24 per unit for any activity level within the relevant range.
• C) The company's contribution margin ratio is 40%.
• D) Responses A, B, and C are all correct.

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Definitions:

Basis-of-the-Bargain Requirement

A legal principle emphasizing that a statement must have been a part of the reason a party was induced into a contract for it to be considered as warrantable.

Catalog

A systematic list of items, which may include books, products, or collections, usually with descriptive details.

Caveat Emptor

A Latin phrase meaning "let the buyer beware," indicating that the buyer assumes the risk about the quality of the goods being purchased.

Implied Warranty of Fitness

A legal doctrine that suggests that when a seller knows the specific purpose for which an item is purchased, the item is guaranteed to be fit for that particular purpose.