Break-Even Analysis

question 47

Multiple Choice

Break-even analysis. TimeKeepers is about to introduce a new LED clock and has determined that it will charge $30 per clock. The firm must decide whether or not to purchase a high-capacity clock-making machine. If the high-capacity machine is selected, then the fixed costs for the firm will be $5,000 per year, with variable costs of $5 per clock. Otherwise the fixed costs will be $1,000, with variable costs of $15 per clock. Above what level of expected sales should TimeKeepers choose the high fixed cost alternative to maximize pretax operating cash flow?

• A) 400 units
• B) 500 units
• C) 4,000 units
• D) 5,000 units

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Definitions:

Aversive Effects

Unpleasant or harmful outcomes that can result from a certain action or condition, leading to avoidance behavior.

Efficient Human Functioning

Optimal performance of the human body and mind, often in reference to health, productivity, or well-being.

Attachment

Attachment refers to the emotional bond that develops between an infant and their primary caregiver, influencing patterns of interpersonal relationships later in life.

Providing Contact

In psychology, this refers to the act of creating an opportunity for physical or emotional connection between individuals.