Wheel and Tire Manufacturing Currently Produces 1,000 Tires Per Month

question 147

Multiple Choice

Wheel and Tire Manufacturing currently produces 1,000 tires per month. The following per unit data apply for sales to regular customers: The plant has capacity for 3,000 tires and is considering expanding production to 2,000 tires. What is the total cost of producing 2,000 tires?

• A) $39,000
• B) $78,000
• C) $68,000
• D) $62,000

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Definitions:

Cash Dividends

Payments made by a corporation to its shareholders from earnings, typically on a quarterly basis, in the form of cash.

Available-for-sale Debt Investment

Debt securities not classified as held-to-maturity or trading securities, and can be sold in the short-term for liquidity purposes.

Fair Value

The estimated market price of an asset or liability, reflecting the amount for which it could be exchanged in a current transaction between informed, willing parties.

Income Statement

A financial report detailing a company's revenues, expenses, and net income over a specific accounting period, showing its operating performance.