During the Past Year a Company Had Total Fixed Costs

question 79

Multiple Choice

During the past year a company had total fixed costs of $70,000. Its product sold for $9 per unit. Variable costs during this time equaled $5 per unit. Next year the company is anticipating a 4% increase in total fixed costs and a $1 per unit decrease in variable costs, but would like to maintain its current selling price per unit. How many units must the company sell next year to earn $1,000,000? (Round answer to complete units.)

• A) 119,200
• B) 200,000
• C) 214,560
• D) 268,200
• E) 18,200

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Definitions:

Constant Growth Period

The constant growth period refers to a phase in which a company or financial asset's dividends or earnings grow at a steady, unchanging rate.

Preemptive Right

Gives the current shareholders the right to purchase any new shares issued in proportion to their current holdings. The preemptive right enables current owners to maintain their proportionate share of ownership and control of the business.

Proxy Fight

An attempt to take over a company in which an outside group solicits existing shareholders’ proxies, which are authorizations to vote shares in a shareholders’ meeting, in an effort to overthrow management and take control of the business.

Dissident Shareholders

Shareholders who disagree with the company's management and policies, often expressing their dissatisfaction through votes against management proposals.