Please explain:

*Why the correct answer is correct,

*Why the other ones are incorrect or not the best answer.

1) Compute the break-even point (in dollars) if fixed costs are $540,000 and variable cost are 70% of sales.

a) $3,850,000

*b) $1,800,000 (correct answer)

c) $1,650,000

d) $900,000

7) Max, Inc., can sell a large piece of machinery for $90,000. The machinery originally cost $240,000 and has accumulated depreciation of $130,000. Max will have to pay a 5% sales commission on the sale. Rather than sell, Max is considering leasing the machine. It can be leased for four years for $24,000 per year. Max has estimated future operating expenses to be $3,000 per year, and Max will be responsible for those expenses. Which of the following options most accurately describes the analysis and decision for Max?

a) Leasebecause differential revenues are $6,000 if Max leases rather than sells

b) Leasebecause Max will lose $20,000 if it sells the equipment for less than its $110,000 book value

c) Sellbecause differential income of selling rather than leasing is $6,000

*d) Sellbecause differential income is $1,500 if Max sells rather than leases (correct answer)