Nonesuch Company Sells Only One Product at a Regular Price

question 68

Multiple Choice

Nonesuch Company sells only one product at a regular price of $7.50 per unit. Variable expenses are 60 percent of sales and fixed expenses are $30,000. Management has decided to decrease the selling price to $6.00 in hopes of increasing its volume of sales.
What is the new break-even point in units for Nonesuch Company when the selling price is $6.00?

• A)10,000 units
• B)20,000 units
• C)4,000 units
• D)6,667 units

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Definitions:

Expected Rate Of Return

The profit or loss an investor anticipates on an investment, stated as a percentage of the initial investment.

Total Investment

The sum of all expenditures on capital assets, including stocks, bonds, real estate, and physical goods, within a specific period.

Opportunity Cost

The price of missing out on the next best option while making a choice or deciding between various possibilities.

Borrowed Funds

Capital that is obtained through loans or credit, typically for investment or expenditures, that needs to be repaid.