Architect Supplies Pty Ltd has a new manager who has been able to reduce the cos

Question

Architect Supplies Pty Ltd has a new manager who has been able to reduce the costs of production and increase the profitability of the adjustable drawing table. The management are very happy but would like to know how much profit they could make from the adjustable drawing table based on the following information Using this information provided calculate the expected profit (rounded to the nearest whole dollar) that the adjustable drawing table will bring in to the business Average Selling Price per unit Variable Cost per unit Fixed Costs Expected sales volume S-558 $-342 s 27,852 units-427

Explanation / Answer

Contribution per unit

= Selling price per unit – Variable costs per unit

= $558 - $342

= $216 per unit

Total contribution

= Contribution per unit x Number of units

= $216 x 427

= $ 92,232

Expected profit

= Contribution – Fixed costs

= $ 92,232 - $27,852

= $ 64,380

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