A Producer with Only One Product Has Total Fixed Costs

question 187

Multiple Choice

A producer with only one product has total fixed costs of $15,000 per month. In addition, it cost the producer $100 in variable costs to produce each unit of his product (raw materials and direct labor cost) . The producer charges his wholesalers $125 per unit. What is the sales amount to break even?

• A) $70,000
• B) $75,000
• C) $80,000
• D) $85,000
• E) $90,000

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Definitions:

Preexisting-Duty Rule

A rule in contract law stating that an agreement to do what one is already legally obligated to do does not constitute valid consideration for a new contract.

Uniform Commercial Code

A wide-ranging assembly of legal directives that command all business activities in the United States.

Service Contracts

Agreements between a service provider and a customer that outline the terms of professional service delivery, including scope, quality, and responsibilities.

Liquidated Debt

A debt of a specific, fixed amount that is acknowledged between parties or determined through a legal process.