Arquebus Company Is Owned and Operated by a Craftsman Who

question 154

Multiple Choice

Arquebus Company is owned and operated by a craftsman who makes replicas of historic firearms for museums, sportsmen and collectors. He is currently producing 40 flintlock muskets per month. Cost data are as follows:
$$\begin{array} { l l } \text { Price } & \$ 720 \text { per unit } \\\text { Variable cost } & \$ 470 \text { per unit } \\\text { Fixed costs } & \$ 8,000 \text { per month }\end{array}$$
In June, the cost of the special kind of metal he uses went up considerably, and the variable cost per unit increased by $50 per unit.
- If volume and other factors remain constant, how will this affect the company's breakeven point in sales dollars?

• A) It will go up by $5,760 of sales revenue.
• B) It will go up by $2,400 of sales revenue.
• C) It will go down by $400 of sales revenue.
• D) It will go down by $2,720 of sales revenue.

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Definitions:

Elasticity

Elasticity refers to the economic concept describing the change in the behavior of buyers and sellers in response to a change in price or other factors.

Flexibility

is the quality of being able to adapt to new, different, or changing requirements, in both personal and professional contexts.

Grid Computing

A distributed architecture of large numbers of computers connected to solve a complex problem.

Scalability

The ability of a system, network, or process to handle a growing amount of work, or its potential to be enlarged to accommodate that growth.