Asked by Megan Lydon on Sep 22, 2024
Verified
A small company can produce 500 dolls per week. The doll retails for $30. The variable costs are $7.50 per doll and fixed costs are $9,000 per week. How many dolls must be sold each week to produce a net income of $1125?
A) 400 dolls
B) 425 dolls
C) 450 dolls
D) 475 dolls
E) 375 dolls
Net Income
The total profit of a company after all expenses, including taxes and operational costs, have been deducted from total revenue.
Variable Costs
Expenses that vary directly with the level of production or service delivery.
Fixed Costs
Fixed outgoings, including rent, salaries, and insurance, that are unaffected by production or sales volumes.
- Utilize concepts of fixed and variable costs to ascertain the sales necessary for achieving a designated net income.
Verified Answer
AM
ashutosh mishra5 days ago
Final Answer :
C
Explanation :
To find the break-even point in units, we use the formula: Break-even point in units = (Fixed Costs + Desired Profit) / (Selling Price per Unit - Variable Cost per Unit). Plugging in the given values: (9000 + 1125) / (30 - 7.5) = 10125 / 22.5 = 450 dolls.
Learning Objectives
- Utilize concepts of fixed and variable costs to ascertain the sales necessary for achieving a designated net income.