A Manufacturer Has a Monthly Fixed Cost of $45,000 and a Production

question 38

Multiple Choice

A manufacturer has a monthly fixed cost of $45,000 and a production cost of $9 for each unit produced. The product sells for $40/unit. What is the cost function? What is the revenue function? What is the profit function?

• A) C(x) = 9x + 45,000, R(x) = 40x and P(x) = 31x - 45,000
• B) C(x) = 40x + 9, R(x) = 9x and P(x) = -31x + 45,000
• C) C(x) = 40x + 45,000, R(x) = 45,000x and P(x) = 31x - 45,000
• D) C(x) = 9x + 45,000, R(x) = 9x and P(x) = 31x + 45,000
• E) C(x) = 9x + 45,000, R(x) = 45,000x and P(x) = 31x + 45,000

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Definitions:

Liquidity Ratios

Financial metrics used to determine a company's ability to meet its short-term debt obligations.

Debt Management Ratios

Financial ratios that are used to evaluate a company's ability to manage its long-term and short-term debt obligations.

Average Collection Period

The average number of days it takes for a company to receive payments owed by its customers, reflecting the efficiency of its credit and collection policies.

Liquidity Problem

A liquidity problem occurs when an individual or organization struggles to convert assets into cash quickly without significant losses in value, potentially affecting their ability to meet immediate financial obligations.