Joe,Jeff and Jerry Frank Own Frank Brothers Farm,a Seed Company

question 21

Multiple Choice

Joe,Jeff and Jerry Frank own Frank Brothers Farm,a seed company specializing in seed corn.At their weekly meeting they tried to calculate the portion of the farm's overhead expenses that is fixed and the portion that is variable.Over the past twelve months,the number of bushels of seed corn that has been sold reached its peak in May,when the total monthly overhead costs totaled $250,000 for 95,000 bushels of seed corn sold.The lowest number of bushels sold in the last twelve months occurred in December,when total overhead costs were $75,000 for 7,500 bushels sold.What was the variable cost per yard?

• A)$0.50
• B)$2.00
• C)$10.00
• D)$2.63

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Definitions:

Utility Function

A mathematical representation that ranks preferences or satisfaction levels of an individual or household for different bundles of goods and services.

Consumption

Domestic consumption of various goods and services.

Interest Rate

The annual percentage yield that is charged as interest for borrowing money or paid to investors as a return on investment.

Income

Money received on a regular basis from work, investments, business, etc., used to fund living expenses and savings.