The Following Costs Have Been Estimated Based on Sales of 30,000

question 149

Multiple Choice

The following costs have been estimated based on sales of 30,000 units:
$$\begin{array} { | l | r | r | } \hline & \begin{array} { r } \text { Total Annual } \\\text { Costs }\end{array} & \begin{array} { r } \text { Percent That Is } \\\text { Variable }\end{array} \\\hline \text { Direct materials } & \$ 300,000 & 100 \% \\\hline \text { Direct labor } & 250,000 & 100 \\\hline \begin{array} { l } \text { Manufacturing } \\\text { overhead }\end{array} & 250,000 & 50 \\\hline \begin{array} { l } \text { Selling and } \\\text { administrative }\end{array} & 150,000 & 25 \\\hline\end{array}$$ What selling price will yield a contribution margin of 40%?

• A) $59.38
• B) $43.75
• C) $39.58
• D) $33.25

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Definitions:

International Trade

The exchange of goods and services between countries, driven by comparative advantage and resulting in mutual economic benefits.

Autarky Price

The price of a good or service within a country that is not engaged in trade with other countries, self-sufficiently.

Producer Surplus

The difference between what producers are willing to accept for a good or service versus what they actually receive, often visualized as the area above the supply curve and below the market price.

International Trade

The exchange of goods and services between countries, driven by comparative advantages and resulting in increased global economic interaction.