The Following Data Pertain to Last Month's Operations What Is the Break-Even Point in Dollars?
A) $18,000

question 3

Multiple Choice

The following data pertain to last month's operations:
$\begin{array}{|l|r|}\hline \text { Selling price } & \$ 20 \text { per unit } \\\hline \text { Variable production cost } & \$ 12 \text { per unit } \\\hline \text { Fixed production cost } & \$ 3,000 \\\hline \text { Variable selling \& administrative expenses } & \$ 3 \text { per unit } \\\hline \text { Fixed selling \& administrative expenses } & \$ 1,500 \\\hline\end{array}$
What is the break-even point in dollars?

• A) $18,000.
• B) $6,000.
• C) $11,250.
• D) $7,500.

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Definitions:

Diminishing Returns

The principle that if one factor of production is increased while others remain constant, the overall returns will eventually decrease after reaching an optimal level.

Opportunity Cost

The act of foregoing potential opportunities for gain from several alternatives when deciding on one.

T-shirts

Casual garments made from fabric, typically short-sleeved and collarless, worn as informal wear or under clothing.

Rice

A cereal grain which is a staple food for a large part of the world's human population, especially in Asia.