The Axle Division of LaBate Company Makes and Sells Only

question 115

Multiple Choice

The Axle Division of LaBate Company makes and sells only one product. Annual data on the Axle Division's single product follow:
$\begin{array}{|l|r|}\hline \text { Unit Selling Price } & \$ 50 \\\hline \text { Unit Variable Cost } & \$ 30 \\\hline \text { Total Fixed Costs } & \$ 200,000 \\\hline \text { Average Operating Assets } & \$ 750,000 \\\hline \text { Minimum Required Rate of Return } & 12 \% \\\hline\end{array}$
-If Axle sells 16,000 units per year,what would be the return on investment?

• A) 12%.
• B) 15%.
• C) 16%.
• D) 18%.

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Definitions:

Binding

A legal or contractual agreement that is enforceable in a court of law.

Lapsed

Refers to a policy or agreement that becomes invalid because it was not renewed or maintained as required.

Verbal Offer

A proposal made orally to enter into a contract or agreement, which can be legally binding if it meets certain criteria.

Invitation to Do Business

An expression of interest or a solicitation that is not legally binding, essentially a preparatory step to entering negotiations.