If a Firm with $49,000 in Fixed Costs Breaks Even

question 49

Multiple Choice

If a firm with $49,000 in fixed costs breaks even on 7,000 units, how many units must the firm sell to earn $30,000 in operating profit?

• A) 30,000 units
• B) 11,286 units
• C) 15,824 units
• D) There is not enough information to determine the unit sales required.

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Definitions:

Proportional

A relationship where two quantities increase or decrease at the same rate, maintaining a constant ratio.

Regressive

Refers to a tax system where the tax rate decreases as the taxable amount increases, often placing a higher burden on lower-income earners.

Tax Incidence

The analysis of the effect of a particular tax on the distribution of economic welfare among entities, determining who ultimately bears the cost of the tax.

Burden

The load, duty, responsibility, or stress placed upon an individual or entity.