Answer the Following Questions Using the Information Below

question 68

Multiple Choice

Answer the following questions using the information below:
Martha Manufacturing produces a single product that sells for $80. Variable costs per unit equal $32. The company expects total fixed costs to be $72,000 for the next month at the projected sales level of 2,000 units. In an attempt to improve performance, management is considering a number of alternative actions. Each situation is to be evaluated separately.
-Suppose management believes that a $16,000 increase in the monthly advertising expense will result in a considerable increase in sales. Sales must increase by how much to justify this additional expenditure?

• A)200 units
• B)334 units
• C)500 units
• D)None of these answers are correct.

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Definitions:

E(XY)

The expected value of the product of two random variables, indicating their joint variability.

Coefficient of Correlation

A measure that indicates the extent to which two variables fluctuate together. A value closer to 1 or -1 indicates a strong relationship, while a value near 0 suggests no relationship.

X and Y

Typically used to represent independent and dependent variables in a mathematical function or data set, respectively.

Marginal Probability

is the probability of an event occurring without considering other related events.