After an Intensive Research and Development Effort, Two Methods for Producing

question 30

Multiple Choice

After an intensive research and development effort, two methods for producing playing cards have been identified by the Turner Company.One method involves using a machine having a fixed cost of $10, 000 and variable costs of $1.00 per deck of cards.The other method would use a less expensive machine (fixed cost = $5, 000) , but it would require greater variable costs ($1.50 per deck of cards) .If the selling price per deck of cards will be the same under each method, at what level of output will the two methods produce the same net operating income (EBIT) ?

• A) 5, 000 decks
• B) 10, 000 decks
• C) 15, 000 decks
• D) 20, 000 decks
• E) 25, 000 decks

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Definitions:

Personalized Services

Tailored services that are adapted to meet the individual needs or preferences of customers, often used to enhance customer satisfaction and loyalty.

Mass Production

The manufacture of large quantities of standardized products, frequently using assembly line technology or automated systems.

Home-Based Consulting

Providing professional advice and services from a consultant’s residence rather than a traditional office setting.

80-Hour Weeks

Working weeks that consist of 80 hours of work, often indicating a high level of commitment or demand in a job or project.