If Monthly Fixed Costs Are $21,000 and the Contribution Margin

question 14

Multiple Choice

If monthly fixed costs are $21,000 and the contribution margin ratio is 42%,the monthly sales volume required to break even is:

• A)$8,820.
• B)$50,000.
• C)$78,000.
• D)$39,207.

Understand the concept of price elasticity and its effect on sales volume and net operating income.

Grasp the techniques for calculating net operating income under different pricing and sales scenarios.

Develop an understanding of value-based pricing and its application in setting product prices.

Apply the principle of target costing to project desired profits and set pricing strategies.

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Definitions:

Short-Run Aggregate Supply

The total supply of goods and services that firms in an economy are willing and able to produce over a short period, generally at existing price levels.

Price Level Expectations

Price level expectations refer to the anticipations of consumers, firms, and other economic actors regarding the future general price level in the economy, influencing their economic decisions.

Short-Run Aggregate-Supply Curve

A visual depiction that illustrates the link between the overall output of goods and services and the price level for production in the short-term.

Short-Run Economic Fluctuations

Variations in the pace of economic activity, typically characterized by changes in GDP, unemployment, and other indicators, happening over a short period.