Millar Company Produces a Single Product Which It Sells for $89

question 100

Multiple Choice

Millar Company produces a single product which it sells for $89 a unit. If the fixed costs of manufacturing and selling the product are $68,400 a month and the variable costs are $57 a unit, which of the below are correct?

• A) The fixed costs amount to $32 per unit at any level of output within a relevant volume range.
• B) The company will break even with a sales volume of $68,400 a month.
• C) An increase in sales volume above $68,400 a month will cause an increase in fixed costs.
• D) The contribution margin per unit of product is $32.

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Definitions:

Indifference Curves

Graphical representations in economics to show combinations of two goods among which a consumer is indifferent in preference.

Budget Constraints

The limitations on the consumption choices of individuals or households based on their income and the prices of goods and services.

Optimum

The best or most favorable point, level, or condition, especially in terms of efficiency or success.

Indifference Curves

Graphical representations of different combinations of two goods between which a consumer is indifferent, showing preferences regarding consumption.