Contemporary Corp

question 21

Multiple Choice

Contemporary Corp. sells a single product for $80. Variable costs are 40%% of the selling price, and the company has fixed costs that amount to $500,000. Current sales total 18,000 units. In order to produce a target profit of $22,000, Contemporary's dollar sales must total:

• A)$36,667.
• B)$833,333.
• C)$870,000.
• D)$1,250,000.
• E)$1,305,000.

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Definitions:

Mutually Exclusive Projects

Projects where the acceptance of one will automatically exclude the option of accepting the other.

IRR Rule

A guideline for evaluating potential investments wherein an investment is considered acceptable if its internal rate of return exceeds a predefined threshold.

NPV Rule

A principle stating that an investment should be made if its Net Present Value (NPV) is positive, indicating that the project's returns exceed its costs.

Marginal Income Tax Rate

The percentage of tax applied to your income for every dollar that falls within a certain tax bracket.