Production Has Indicated That They Can Produce Widgets at a Cost

question 2

Multiple Choice

Production has indicated that they can produce widgets at a cost of $4.00 each if they lease new equipment at a cost of $10,000. Marketing has estimated the number of units they can sell at a number of prices (shown below) . Which price/volume option will allow the firm to avoid losing money on this project?

• A) 4,000 units at $5.00 each.
• B) 3,000 units at $7.50 each.
• C) 1,500 units at $10.00 each.
• D) 1,000 units at $15.00 each
• E) 25,000 units.

---

Definitions:

Dividends

Payments made by a corporation to its shareholders, usually out of profits or reserves.

Net Income

The total profit of a company after all expenses, taxes, and costs have been subtracted from total revenue; a key indicator of financial health.

Dividends

Profits distributed by a corporation to its share owners, regularly as a monetary payment.

Equity Method

An accounting technique used to assess the profits earned by investments in other companies, recognizing income based on the investor's share of the earnings.