KR Sales Had $1,200,000 in Sales Last Month

question 77

Multiple Choice

KR Sales had $1,200,000 in sales last month.The variable cost ratio was 60% and operating profits were $80,000.What is KR's margin of safety in sales dollars?

• A)$200,000.
• B)$300,000.
• C)$500,000.
• D)Cannot determine with the information given.

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Definitions:

Third-Degree Price Discrimination

A pricing strategy where a seller charges different prices to different consumer groups for the same product, based on their willingness to pay.

Marginal Cost Function

A mathematical expression that describes how the cost of producing one additional unit of a good or service varies with the quantity produced.

Reservation Price

The maximum amount a consumer is willing to pay for a good or service.

Elasticity of Demand

An index that determines the sensitivity of consumer demand for a product to its price change, by comparing the percent change in the amount of the good demanded with the percent change in its price.