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Mod Clothiers Makes Women's Clothes

Question 36

Multiple Choice

Mod Clothiers makes women's clothes. It costs $28 000 to produce 5000 pairs of polka-dot polyester pants. They have been unable to sell the pants at their usual price of $50.00. The company is evaluating two alternatives. They could sell the pants 'as is' for a total $15 000 or they could modify the pants and sell them for a total of $20 000.
At what cost to modify each pair of pants, would Mod Clothiers be indifferent between the two alternatives?


A) $0.40
B) $0.50
C) $0.75
D) $1.00

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