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Two Companies Sell an Identical Product at the Same Selling

Question 12

Multiple Choice

Two companies sell an identical product at the same selling price of $12.00. Mini's production is quite labour intensive with variable costs of $3.50 per unit and fixed costs of $100,000. Maxi has invested more in labour-saving technology and has fixed costs of $150,000 and variable costs of $2.00 per unit. Compared to maxi, Mini has a:


A) Higher breakeven point and a higher contribution per unit
B) Lower breakeven point and a lower contribution per unit
C) Higher breakeven point and a lower contribution per unit
D) Lower breakeven point and a higher contribution per unit

Correct Answer:

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