Production Has Indicated That They Can Produce Widgets at a Cost

question 39

Multiple Choice

Production has indicated that they can produce widgets at a cost of $3.00 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) 7,500 units at $17.50 each.
• B) 4,000 units at $20.00 each.
• C) 3,000 units at $22.50 each.
• D) 2,500 units at $25.00 each
• E) 1,500 units at $27.50 each.

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Definitions:

Contractual Obligations

Duties that parties are legally bound to perform under a contract.

Terminated

The condition of having been ended or concluded, often referring to employment, contracts, or services.

Parol Evidence

A rule in contract law that prevents the introduction of evidence of prior or contemporaneous negotiations and agreements that contradict, modify, or vary the contractual terms of a written contract.

Integrated Contract

A contract that is considered complete and final, where all the terms are included in the document itself, precluding oral or other external agreements.