Roberts Company Has Fixed Costs of $10,000

question 172

Multiple Choice

Roberts Company has fixed costs of $10,000. Their contribution margin ratio is 40% and ratio of selling expenses to sales is 20%. What is the breakeven point in sales dollars?

• A)$50,000
• B)$25,000
• C)$4,000
• D)$2,000

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Definitions:

Hidden Actions

Situations in a principal-agent relationship where the agent undertakes actions that the principal cannot observe directly.

Hidden Information

Circumstances in which one party in a transaction has access to more or better information than the other party, potentially leading to an imbalance in decision-making or exploitation.

Moral Hazard

A situation where one party is more likely to take risks because another party bears the cost of those risks.

All-You-Can-Eat Buffets

Dining establishments offering customers the opportunity to eat unlimited amounts of food for a fixed price.