Chris Muss Is Going to Sell Ad-Hoc Compact Disks for $40

question 35

Multiple Choice

Chris Muss is going to sell Ad-hoc compact disks for $40 a box; one box is considered to be one unit. The disks cost Chris $10 a unit. She is planning to rent a booth at the up-coming Area Computer Show. She has three options for attending the show: 1. paying a fixed fee of $3,000;
2) paying a $1,000 fee plus 10% of her revenue made at the convention, or;
3) paying 25% of her revenue made at the convention.
Which of the following statements is true?

• A) CVP analysis can show that the risks are identical in each case.
• B) The break-even point is the identical in each case.
• C) One of the options will allow Chris Muss to break-even, even if she doesn't sell any disks, assuming she can return any unsold disks for a full refund.
• D) Fixed costs are inherent in all of the options.
• E) Operating income per unit is the same in each case, as both selling price and costs are the same.

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Definitions:

Distinct Items

Items that are recognizably different or not identical, often used in the context of counting unique elements in a set.

Experiment

A procedure carried out under controlled conditions to investigate a hypothesis or demonstrate a known fact, often involving the manipulation of variables to determine their effects.

Simple Event

An event with only one outcome or a very straightforward outcome in a probability scenario.

Single Die

Refers to one of a pair of small objects, typically cube-shaped, with sides numbered from one to six, used in games of chance.