A Manufacturing Company Is Considering Producing a New Product

question 62

Multiple Choice

A manufacturing company is considering producing a new product. The variable cost of the new product is $60 per unit, and the total fixed costs are $75,000 for a month. The company could produce 1,500 units per month, and sell the product for $125 each. What would be the net income at 75% capacity?

• A) loss $3,500
• B) loss $250
• C) loss $1,800
• D) loss $1,875
• E) loss $2,025

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Definitions:

Decant

The process of gently pouring a liquid from one container to another, usually to separate it from precipitated solids or sediments.

Clarity

The quality of being easily understood, specifically in speech or writing, or the clearness in thought and expression.

CLIA-waived

Refers to tests that are simple laboratory examinations and procedures that have an insignificant risk of an erroneous result under the Clinical Laboratory Improvement Amendments.

Bilirubin

A yellow substance that is produced during the normal breakdown process of heme in vertebrates and is eliminated through the bile.