Suppose You Are the Owner of a Picture Frame Store

question 154

Multiple Choice

Suppose you are the owner of a picture frame store and you wish to calculate how many pictures you must sell to cover your fixed and variable costs at a given price.Let's assume that the demand for your pictures is strong,so the average price customers are willing to pay for each picture frame is $120.Also,suppose your fixed costs (FC) total $32,000 (real estate taxes,interest on a bank loan,etc. ) and unit variable cost (UVC) for a picture frame is $40 (labor,glass,frame,and matting) .What is the quantity of picture frames you will need to sell to break-even?

• A)200 picture frames
• B)400 picture frames
• C)800 picture frames
• D)1,600 picture frames
• E)2,000 picture frames