Use the Following to Answer the Questions Below

question 12

Multiple Choice

Use the following to answer the questions below.
Luvmatics plans to produce a new product.Three different models are planned: the Regular,Large,and Jumbo.The fixed costs depend on which of two locations are used;in San Francisco the fixed costs would be $2.5 million per year,but in Tuttle the fixed costs would be $1.2 million.Sale prices and variable costs for the three models are shown in the table. Table A.1
-Use the information in Table A.1.Assume the fixed costs and sales price in both locations are constants and the variable costs in San Francisco are as shown in the table.By how much would the variable cost in Tuttle have to rise to give both locations an identical break-even point for the Regular model?

• A)$0.40
• B)$5.40
• C)$10.40
• D)$15.40

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Definitions:

Communications

The process of sending, receiving, and interpreting information through any number of channels.

Third Party

An entity not directly involved in a transaction or agreement but who may be affected by it or have interests in its outcome.

Liable

Being legally responsible for something, typically referring to the obligation to pay damages or compensation.

Contracts

Legally binding agreements between two or more parties that are enforceable by law.