Based on a Predicted Level of Production and Sales of 22,000

question 28

Multiple Choice

Based on a predicted level of production and sales of 22,000 units, a company anticipates total variable costs of $99,000, fixed costs of $30,000, and operating income of $36,000.
-Based on this information, the budgeted amount of operating income for 20,000 units would be:

• A) $32,727.
• B) $30,000.
• C) $150,000.
• D) $69,000.
• E) $60,000.

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Definitions:

Producer Surplus

Producer surplus is the difference between what producers are willing to accept for a good or service and what they actually receive due to higher market prices.

Tariff

A tax imposed by a government on imported or exported goods, often used to protect domestic industries or to generate revenue.

Consumer Surplus

The difference between what consumers are willing to pay for a good or service and the actual price they pay.

Comparative Advantage

Comparative advantage is the ability of an individual, company, or country to produce a good or service at a lower opportunity cost than competitors, underpinning international trade theory.