Camden Corporation Sells Three Products (M, N, and O) in the Following

question 46

Multiple Choice

Camden Corporation sells three products (M, N, and O) in the following mix: 3:1:2. Unit price and cost data are:
$\begin{array}{lrrr}&M&N&O\\\text { Unit sales price } & \$ 7 & \$ 4 & \$ 6 \\\text { Unit variable costs } & 3 & 2 & 3\end{array}$
Total fixed costs are $340,000. The break-even point in sales dollars for the current sales mix is:

• A) $20,000
• B) $289,000
• C) $400,000
• D) $629,000
• E) $740,000

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Definitions:

Risk-Free Rate

The return on investment with no risk of financial loss.

Market Risk Premium

The excess return that investors require for choosing to purchase stocks over risk-free securities.

SML Slope

The slope of the Security Market Line, which represents the risk-return trade-off at any given time, illustrating the expected return of a security per unit of risk.

Capital Asset Pricing Model

A model used to determine the theoretical expected return on an investment, considering risk-free return, the investment's volatility, and the expected return of the market.