Nonesuch Company Sells Only One Product at a Regular Price

question 83

Multiple Choice

Nonesuch Company sells only one product at a regular price of $7.50 per unit. Variable expenses are 60 percent of sales and fixed expenses are $30,000. Management has decided to decrease the selling price to $6.00 in hopes of increasing its volume of sales.
What is the sales dollars level required to break even at the old price of $7.50?

• A)$50,000
• B)$12,000
• C)$18,000
• D)$75,000

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Definitions:

Sole Proprietorship

A business owned by one individual.

Unlimited Liability

A legal obligation where the owners or partners of a business are personally responsible for all the debts of the business, without any limits on the amount for which they can be liable.

Transfer Ownership

The process of legally moving the rights and responsibilities of an asset or property from one entity or individual to another.

Corporate Shareholders

Individuals or entities that legally own one or more shares of stock in a public or private corporation, granting them rights to dividends and a vote in company matters.