WidgetMaker Has Discovered That Its Fixed Costs Are $100,000 Per

question 60

Multiple Choice

WidgetMaker has discovered that its fixed costs are $100,000 per month.If WidgetMaker sells its widgets for $35 per unit based upon a cost of $15 per unit to manufacture (variable costs) then what dollar sales per year must WidgetMaker sell in order to break-even?

• A) $175,000
• B) $1,200,000
• C) $2,100,000
• D) none of the above

---

Definitions:

Futures Contracts

Standardized legal agreements to buy or sell something at a predetermined price at a specified time in the future, often used for commodities or financial instruments.

Liquidity

The ease with which an asset or security can be converted into cash without affecting its market price.

Speculators

Investors who attempt to profit from market volatility by buying and selling stocks or other financial instruments, often taking higher risks.

Hedgers

Individuals or entities that enter financial contracts to reduce exposure to risk, typically by locking in prices for commodities or currencies.