-Suppose You Are the Owner of a Picture Frame Store

question 141

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) . Figure 11-6 above shows that by selling 800 picture frames, you will

• A)break even.
• B)earn a profit.
• C)incur a loss.
• D)have no fixed costs.
• E)have no variable costs.

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Definitions:

Ordering Costs

Expenses associated with making an order for goods or services, including administrative costs, shipping charges, and time spent on ordering processes.

Carrying Costs

Expenses associated with holding inventory, including storage, insurance, and obsolescence.

Gadgets

Small electronic or mechanical devices or tools that are innovative and designed for a particular purpose.

Significant Quantities

Items or entities in considerable amounts that are large enough to warrant attention or impact assessment.