Senate Inc

question 53

Multiple Choice

Senate Inc.is considering two alternative methods for producing playing cards.Method 1 involves using a machine with a fixed cost (mainly depreciation) of $12,000 and variable costs of $1.00 per deck of cards.Method 2 would use a less expensive machine with a fixed cost of only $5,000,but it would require a variable cost of $1.50 per deck.The sales price per deck would be the same under each method.At what unit output level would the two methods provide the same operating income (EBIT) ?

• A)12,600
• B)14,000
• C)15,400
• D)16,940
• E)18,634

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Definitions:

Negative Correlation

A connection between two variables where one variable rises as the other falls, and the reverse is also true.

Mice

Small rodents that are often found in both wild and domestic environments, sometimes considered pests.

Selection Bias

Occurs when the sample isn't representative of the population, leading to skewed or biased results.

Vouchers

Certificates or coupons that can be exchanged for goods, services, or a reduction in charges, often provided as part of a promotional or welfare program.