Gambino Corporation Is a Wholesaler That Sells a Single Product

question 14

Multiple Choice

Gambino Corporation is a wholesaler that sells a single product. Management has provided the following cost data for two levels of monthly sales volume. The company sells the product for $138.80 per unit. $$\begin{array} { | l | r | r | } \hline \text { Sales volume (units) } & 6,000 & 7,000 \\\hline \text { Cost of sales } & \$ 369,000 & \$ 430,500 \\\hline \text { Selling and administrative costs } & \$ 407,400 & \$ 418,600 \\\hline\end{array}$$ The best estimate of the total monthly fixed cost is:

• A)$776,400
• B)$340,200
• C)$812,750
• D)$849,100

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Definitions:

Financial Management

The strategic planning, organizing, directing, and controlling of financial undertakings in an organization or an institution.

Equity Financed

A means of raising capital through the sale of shares in a company, providing investors with ownership interests.

Accounts Receivable Policies

Guidelines and procedures a company follows to manage money owed by customers for goods or services delivered on credit.

Shares of Stock

Shares, as units of corporate or asset ownership, provide an even allocation of profit distributions in the guise of dividends, pending announcements.