A Firm Makes and Sells Three Standard Products in a Specific

question 2

Multiple Choice

A firm makes and sells three standard products in a specific product mix. All three products are made using the same production facilities. The following budgeted data for the coming year is available.
Total annual fixed costs $348 000
Tax rate 40%
Calculate the margin of safety for the firm.

• A) $1 776 000
• B) $1 664 000
• C) $1 332 000
• D) None of the given answers

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Definitions:

Optimal Consumption

The consumption point at which a consumer achieves the highest possible satisfaction from available resources.

Loaves

Units of bread or any baked product that are shaped and sized for slicing, often made from a dough or batter.

Pounds

A unit of weight commonly used in the United States and Britain, equivalent to 0.453592 kilograms.

Indifference Curves

Graphical representations in microeconomics to show combinations of two goods that provide the consumer with the same level of satisfaction.