Loretta & Nieces Fixed Costs Are $425,000, Including $25,000 of Depreciation

question 49

Multiple Choice

Loretta & Nieces fixed costs are $425,000, including $25,000 of depreciation expense. The price of each unit sold is $120, and the variable cost per unit is $60. How many units must the firm sell to reach the cash break-even point?

• A) less than 7,333 units
• B) 7,333 units
• C) More than 7,333 units
• D) not enough information has been provided to determine the cash break-even point

---

Definitions:

Demand Increase

A situation where the quantity of a product or service that consumers are willing and able to buy at a given price rises.

Price Elasticity

The sensitivity measure of demand for a good relative to its price changes.

Demand Curve

It illustrates the relationship between the price of a good or service and the quantity demanded for a given period, assuming all other factors are constant (ceteris paribus).

Midpoint Method

A technique used in economics to calculate the elasticity of a variable, which averages the starting and ending values to minimize the bias in the elasticities calculated at different points.