Flying Cloud Co

question 140

Multiple Choice

Flying Cloud Co. has the following operating data for its manufacturing operations: The company has decided to increase the wages of hourly workers which will increase the unit variable cost by 10%. Increases in the salaries of factory supervisors and property taxes for the factory will increase fixed costs by 4%. If sales prices are held constant, the next break-even point for Flying Cloud Co. will be:

• A) increased by 640 units
• B) increased by 400 units
• C) decreased by 640 units
• D) increased by 800 units

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Definitions:

Total Utility

The complete satisfaction or pleasure a consumer obtains from consuming a given quantity of goods or services.

Indifference Curve

A graph showing different bundles of goods between which a consumer is indifferent, reflecting their preferences for certain combinations of goods.

Budget Constraint

Constraints on the assortments of products and services available for purchase by a consumer, determined by their financial resources and market prices.

Tangent

A straight line that touches a curve at a single point without crossing it, often used to find the slope of the curve at that point.