If Total Costs Are $90,000 at an Output of 12,000

question 49

Multiple Choice

If total costs are $90,000 at an output of 12,000 units and $105,000 at 15,000 units, fixed costs are:

• A)$15,000.
• B)$10,000.
• C)$5,000.
• D)$20,000.

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Definitions:

Option Contract

A financial contract that gives the buyer the right, but not the obligation, to buy or sell an asset at a specified price on or before a specified date.

Derivative Security

A financial instrument whose value is based on the value of another asset.

Economic Exposure

Long-term financial risk arising from permanent changes in prices or other economic fundamentals.

Cross-Hedging

Hedging an asset with contracts written on a closely related, but not identical, asset.