Refer to the Scenario Below to Answer the Following Questions

question 106

Multiple Choice

Refer to the scenario below to answer the following questions.
Breakeven Analysis at MRI (Scenario)
Mike has just been hired as a sales manager at Mobile Research Inc. (MRI) , makers of the popular Blueberry wireless phone. At his first management briefing, Mike is informed that the company is losing money, despite the immense popularity of the Blueberry phone. He learns that the company is facing intense competition from its main rival, Mandarin Communications, makers of the M-Phone. The M-Phone has the same popular features as the Blueberry and sells for $40 less. When Mike asked about the cost structure for the Blueberry he was informed that the selling price is $200, variable costs are $120, and total fixed costs are $800,000 per month.
-The following month, Mandarin reduced the selling price of the M-Phone to $140. If MRI decides to match this new selling price, how many Blueberry phones will it need to sell in order to break even?

• A) 24,000
• B) 32,000
• C) 40,000
• D) 48,000
• E) 60,000

Understand the concept of working capital and its importance for short-term liquidity.

Grasp the principles of accounting for leases and long-term assets, including the use of present value concepts.

Comprehend the accounting treatment and recognition criteria for revenues and expenses under the accrual basis.

Recognize the implications of interest on financial instruments and how to calculate interest expense.

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Definitions:

Provided Feedback

The information given to someone about their performance or behavior for the purpose of improvement or reinforcement.

Noise

Unwanted or irrelevant information or disturbances that can interfere with the communication process, perception, or understanding.

Encoding

The process of converting information into a particular format for efficient communication or storage.