-Suppose You Are the Owner of a Picture Frame Store

question 299

Multiple Choice

-Suppose you are the owner of a picture frame store. Let's assume that the average price customers are willing to pay for each picture frame is $120. Also, suppose your fixed costs (FC) total $32,000 (real estate taxes, interest on a bank loan, etc.) and unit variable cost (UVC) for a picture frame is $40 (labor, glass, frame, and matting) . According to Figure 11-6 above, how much profit will your picture frame store make if it sells 400 picture frames?

• A)$48,000
• B)$32,000
• C)$16,000
• D)$0
• E)($32,000)

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Definitions:

Order Fulfillment Department

The division within a company that is responsible for processing customer orders and ensuring they are delivered to the correct address in a timely manner.

Variable Costs

Costs that change in proportion to the level of goods or services produced or sold.

Fixed Costs

Expenses that remain constant regardless of the level of production or sales activity, such as rent, salaries, and insurance premiums.

Variable Service Department Costs

Expenses in a service department that fluctuate in direct proportion to changes in the level of service activity or volume.