Shoe CoHas Fixed Costs of $6 Million and Unit Variable Costs

question 255

Multiple Choice

Shoe Co.has fixed costs of $6 million and unit variable costs of $5 per pair.Suppose a consultant tells Ace it can sell 700,000 pairs of shoes,thus earning a profit of $2.5 million.What potential error is the consultant making?

• A) assuming that fixed costs are independent of price
• B) assuming that units sold is independent of price
• C) assuming that some fixed costs are variable
• D) assuming that some variable costs are fixed
• E) assuming that variable costs are independent of price

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Definitions:

Pragmatic Speech

The aspect of spoken language that involves understanding and using language socially and appropriately in different contexts.

Effective Demonstration

A method of teaching or showing a skill, principle, or technique in a way that is clearly understood and effectively learned by the observer.

Referential Speech

Language use that focuses on naming or labeling objects, people, or events, often observed in early child language development.

Pragmatics

The branch of linguistics concerned with the use of language in social contexts and the ways in which people produce and comprehend meanings through language.