The Sales Price of a Particular Unit Is $19

question 18

Multiple Choice

The sales price of a particular unit is $19.00.The company plans to sell 7,500 units.The variable costs are $6.00 per unit and monthly fixed costs are $112,500.Given this information what is the average fixed cost per unit?

• A)$6.00 per unit
• B)$21.00 per unit
• C)$13.00 per unit
• D)$15.00 per unit

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Definitions:

Tax Benefit

A reduction in tax liability achieved through claiming allowable deductions such as expenses, exemptions, and credits.

Financial Distress

A situation where a company is unable to meet its financial obligations, which can lead to bankruptcy if not addressed.

Homemade Leverage

A strategy where investors adjust the leverage in their own investment portfolio, rather than relying on the leverage employed by the companies in which they own shares.

Business Risk

The exposure a company has to factors that may lower its profits or lead to its failure.