Classify Company Has a Product That Its Sales Department Believes

question 129

Multiple Choice

Classify Company has a product that its sales department believes can be sold for $40 each.Classify requires that all new products yield 20% profit.What is the target cost of the new product?

• A)$4.00
• B)$25.50
• C)$26.00
• D)$32.00

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Definitions:

Shut Down

A temporary choice made by a company to halt manufacturing because of unsuitable market circumstances.

Shutdown Point

The level of production and price at which the revenue of a firm covers its variable costs, below which the firm would cease operations.

Optimal Output

The level of production at which a firm achieves the highest possible profit, given its cost structure and the market price.

Short-Run

A period in which at least one factor of production is fixed, and firms can only adjust variable inputs.