Figure 13-7

-Suppose you are the owner of a picture frame store.Assume that the average price customers are willing to pay for each picture frame is $120.Also,suppose your fixed costs (FC)total $32,000 (real estate taxes,interest on a bank loan,etc. )and unit variable cost (UVC)for a picture frame is $40 (labor,glass,frame,and matting).According to Figure 13-7 above,how much profit will your picture frame store make if it sells 400 picture frames?
A)$48,000
B)$32,000
C)$16,000
D)$0
E)($32,000)

Question

Figure 13-7
 
-Suppose you are the owner of a picture frame store.Assume that the average price customers are willing to pay for each picture frame is $120.Also,suppose your fixed costs (FC)total $32,000 (real estate taxes,interest on a bank loan,etc. )and unit variable cost (UVC)for a picture frame is $40 (labor,glass,frame,and matting).According to Figure 13-7 above,how much profit will your picture frame store make if it sells 400 picture frames?
A)$48,000 
B)$32,000 
C)$16,000 
D)$0 
E)($32,000)

Quizplus · Accepted Answer

The break-even point (point A)is defined as the point at which profit is exactly $0.This occurs when the quantity sold equals 400 picture frames.

Figure 13-7 -Suppose You Are the Owner of a Picture Frame Store.Assume