Answer the following questions using the information below:
Southwestern College is planning to hold a fund raising banquet at one of the local country clubs. It has two options for the banquet:

Southwestern College has budgeted $1,800 for administrative and marketing expenses. It plans to hire a band which will cost another $800. Tickets are expected to be $30 per person. Local business supporters will donate any other items required for the event.
-Kanga Company is considering two different production plans.
Option one: Fixed costs of $10,000 and a breakeven point of 500 units.
Option two: Fixed costs of $20,000 and a breakeven point of 700 units.
Which option should Kanga choose if it is expecting to produce 600 units?
A) Option one.
B) Option two.
C) Both options are equally good.
D) It isn't possible to determine from the information given.

Question

Answer the following questions using the information below:
Southwestern College is planning to hold a fund raising banquet at one of the local country clubs. It has two options for the banquet:
  
Southwestern College has budgeted $1,800 for administrative and marketing expenses. It plans to hire a band which will cost another $800. Tickets are expected to be $30 per person. Local business supporters will donate any other items required for the event.
-Kanga Company is considering two different production plans.
Option one: Fixed costs of $10,000 and a breakeven point of 500 units.
Option two: Fixed costs of $20,000 and a breakeven point of 700 units.
Which option should Kanga choose if it is expecting to produce 600 units?
A) Option one. 
B) Option two. 
C) Both options are equally good. 
D) It isn't possible to determine from the information given.

Quizplus · Accepted Answer

Option one will result in operating income while Option 2 will result in an operating loss.

Answer the Following Questions Using the Information Below