A Company Produces 1,000 Packs of Chicken Feed Per Month

question 19

Multiple Choice

A company produces 1,000 packs of chicken feed per month. Sales price is $4 per pack. Variable cost is $1.50 per unit, and fixed costs are $1,800 per month. Management is considering adding a vitamin supplement to improve the value of the product. The variable cost will go up from $1.50 to $1.90 per unit, and fixed costs will go up by 20%. At what price for the new product will the two alternatives (sell as is or process further) produce the same operating income? Round to nearest cent.

• A)$5
• B)$4.76
• C)$3.99
• D)$4.40

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Definitions:

Creativity

The use of imagination or original ideas to create something; inventiveness in thinking or problem-solving.

Commercially Extinct

Refers to a status where a species of fish or other marine population can no longer sustain a commercial fishery, due to overfishing or other environmental factors.

Over-fishing

The practice of catching fish at a rate faster than they can reproduce, leading to a decline in fish populations.

Fish Population

Refers to the number of fish within a specific ecosystem or area, often considered in terms of species diversity and biomass.