If Creative Corporation has only 250,000 square yards of wood available, what is the highest total amount of fixed cost the company can incur and still break-even?
A) $2,500,000.
B) $4,000,000.
C) $5,000,000.
D) $6,000,000.

Question

Quizplus · Accepted Answer

To break even, the company needs to produce 200,000 units, which will require all 250,000 square yards of wood available. The fixed cost per unit is $25. Therefore, the highest total amount of fixed cost is:

$25 x 200,000 = $5,000,000

So, the best choice is C.

If Creative Corporation Has Only 250,000 Square Yards of Wood