Break-Even Analysis

question 29

Multiple Choice

Break-even analysis. Binders-For-School Ltd is in the process of determining whether to purchase a high-capacity machine to make textbooks for the upcoming school year. The high-capacity machine will generate fixed costs of $10,000 per year versus the $2,000 fixed costs of using a low-capacity machine. The variable costs per unit when using the high-capacity machine will be $30. The company will charge $60 for each textbook and has determined that the high-capacity machine will be more economically beneficial if sales are greater than 800 books. What is the contribution margin under the low-capacity machine scenario?

• A) $10
• B) $20
• C) $30
• D) $40

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Definitions:

Consumerism Concept

A societal and economic structure that supports the continual growth in buying and usage of products and services.

Marketing Concept

A philosophy that businesses should focus on identifying and meeting the needs and wants of their customers through the creation and exchange of value.

Greek Culture

The customs, traditions, and social behaviors found in Greece, characterized by its history, arts, architecture, philosophy, and cuisine.