A Company with Monthly Fixed Costs of $170,000 Expects to Earn

question 19

Multiple Choice

A company with monthly fixed costs of $170,000 expects to earn monthly operating income of $25,000 by selling 6,500 units per month.What is the company's expected unit contribution margin?

• A)$30 per unit
• B)$26 per unit
• C)$22 per unit
• D)The information given is insufficient to determine unit contribution margin.

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Definitions:

Market Demand

The total quantity of a good or service that all consumers in a market are willing and able to buy at various prices.

Plumbing Market

A segment of the market that deals with the distribution and installation of water supply and sanitary systems in buildings.

Long-Run Equilibrium

A state in which all firms in an industry are producing at their minimum long-run average cost, and the market supply equals market demand.

Profit-Maximizing Quantity

The level of production at which a company can achieve the highest possible profit.