Yellow Dot, Inc

question 2

Multiple Choice

Yellow Dot, Inc. sells a single product for $10. Variable costs are $4 per unit and fixed costs total $120,000 at a volume level of 10,000 units. What dollar sales level would Yellow Dot have to achieve to earn a target profit of $240,000?

• A) $400,000.
• B) $500,000.
• C) $600,000.
• D) $750,000.
• E) $900,000.

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Definitions:

Tax-Free Business Combination

A merger or acquisition in which no tax is payable by either the acquiring or target company.

Goodwill

An intangible asset that arises when a business is acquired for more than the fair value of its net identifiable assets.

Taxable Income

The amount of income used to calculate how much tax an individual or a company owes to the government.