A Company sells a product at the rate of $200 per unit. The variable cost per un

Question

A Company sells a product at the rate of $200 per unit. The variable cost per unit is $90 and selling commission to pay is 5%. Company incurs total fixed manufacturing costs of $25000 and total fixed selling and administrative costs of $50000. The number of units the company should produce to earn a profit of $750000 is Select one: a. 1250 b. 750 c. 2500 d. 1500 e. 1000

If selling price per unit is $30, variable costs per unit are $20, total fixed costs are $10,000, the tax rate is 30%, and the company sells 5,000 units, net income is

Select one:

a. $12,000

b. $30,000

c. $14,000

d. $40,000

e. $28,000

Explanation / Answer

Answer to 1 is D

Commission Per Unit = 200 x 5% = 10 per unit

Variable Cost Total = 90 + 10 =100

Contribution Per Unit = Sale Price - Variable Cost

= 200 -100 = 100

Sale to achieve desired profit = (fixed cost + desired profit) / contribution per unit

= (75000+75000) / 100

= 1500 Units

I think profit is typed as 7500000 instead of $75000 beacause answer is not as per given options therefore considered as $75000 profit

Answer to 2 is E

Particulars Amt Sales Revenue (30 x 5000) 150000 Less: Cost of Goods Sold (20 x 5000) 100000 Contribution Margin 50000 Less: Fixed cost 10000 PBT 40000 Less: Tax at 30% 12000 Net Income 28000

Related Questions

Navigate

• Browse (All)
• Browse A
• Subjects

---

---

Integrity-first tutoring: explanations and feedback only — we do not complete graded work. Learn more.