Tim Marlow,the Owner of the Clock Works,wanted to Know How

question 180

Multiple Choice

Tim Marlow,the owner of The Clock Works,wanted to know how many clocks he must sell in order to cover his fixed cost at a given price.Tim knew that he had total fixed costs of $20,000 for equipment,taxes,and a bank loan.He also had a unit variable cost of $20 per clock for labor and materials.If the price Tim charges for each of his clocks is $40,what is his break-even point quantity?

• A)100 clocks
• B)334 clocks
• C)500 clocks
• D)1,000 clocks
• E)10,000 clocks

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Definitions:

Perfectly Competitive Firm

A business operating in a market where there are many buyers and sellers, all selling identical products, with no barriers to entry or exit.

Loss

A financial condition where costs exceed revenues, resulting in a negative profit.

Profit Lost

Refers to the potential earnings that were not realized due to missed or unrealized opportunities.

Sacks of Coffee

Units of measurement used in the coffee industry to quantify large quantities of coffee beans, typically weighing 60 kg each.