1. A company is considering producing a product for a new market. The fixed cost
ID: 3312522 • Letter: 1
Question
1. A company is considering producing a product for a new market. The fixed costs required for manufacturing and delivering the product is $50,000. Labor and material costs are estimated to be approximately $25.00 per product. If the product is sold for $35.00 each, the firm's break-even volume would be:
A) 50,000 units
B) 5,000 units
C) 2,500 units
D) 500 units
2. Routine physical examinations are conducted annually as part of a health service program for the employees. It was discovered that 8% of the employees needed corrective shoes, 15% needed major dental work and 3% needed both corrective shoes and major dental work. What is the probability that an employee selected at random will need either corrective shoes or major dental work.
A) 0.20
B) 0.25
C) 0.50
D) 1.00
E) None of the above
3. What is the median of 26, 30, 24, 32, 32, 31, 27, and 29?
A) 32
B) 29
C) 30
D) 29.5
E) 30.5
Explanation / Answer
1) Let the break-even point be x
So, 50000 + 25 * x = 35 * x
or, 10 * x = 50000
or, x = 5000
Option-B) 5000 units
2) P(either corrective shoes or major dental work.) = P(corrective shoes) + P(major dental work) - P(corrective shoes and major dental work)
= 0.08 + 0.15 - 0.03
= 0.2
Option-A) 0.2
3) Data in ascending order :
24, 26, 27, 29, 30, 31, 32, 32
Median = (29 + 30) / 2 = 29.5
Option-D) 29.5