Acme Dynamite Has $2000 of Variable Costs and $500 of Fixed

question 17

Multiple Choice

Acme Dynamite has $2000 of variable costs and $500 of fixed costs when its output is 250 units.It sells each unit for $25.
If the price of dynamite drops to $10,should Acme continue to operate in the short run?

• A)No,because Price is less than Average Total Cost
• B)Yes,because Price is less than Average Variable Cost
• C)No,because Price is not greater than Average Total Cost
• D)Yes,because Price is greater than Average Variable Cost

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Definitions:

Payroll Expense

The total amount of money a business pays to its employees as wages or salaries, including taxes and benefits, for a specific period.

Cost of Goods Sold

The direct costs attributable to the production of the goods sold in a company.

Rate of Return on Investment

A measure of the profitability or efficiency of an investment, calculated as the ratio of net profits to the initial cost of the investment.

Balance Sheet

A report that outlines the financial standings of a company, including assets, obligations, and owners' equity, at a given time.