Recall that profit = revenue – total cost = R – TC = R – (FC + VC). Total cost i
ID: 1224994 • Letter: R
Question
Recall that profit = revenue – total cost = R – TC = R – (FC + VC). Total cost is the sum of the fixed and variable costs. Samsung will sell you a Galaxy S7 off contract for $660. The phone costs $256 to build (fixed costs) and estimated additional variable costs of about 80% of the fixed costs for marketing, shipping, etc. The phone was launched in April 2016, selling 11 million in one month’s time. How much profit did Samsung make during that month, assuming that all phones were sold at $660 each?
$7.3
$3.6
$2.8
$2.2 B
a.$7.3
b. c.$3.6
d.$2.8
e.$2.2 B
Explanation / Answer
Total revenue = $660 x 11,000,000
Total revenue =$7,260,000,000
Total costs:
Fixed cost = $256 x 11,000,000 = $2,816,000,000
Variable cost (80% of FC) = $2,816,000,000 x 0.8
Variable cost = $2,252,800,000
Total cost of producing 11 million phones = $2,816,000,000 + $2,252,800,000
Total cost = $5,068,800.000
Profit Samsung did make for that month = $7,260,000,000 - $5,068,800,000
Profit Samsung did make = $2,191,200,000.
e. $2.2 B.
*****
Related Questions
Navigate
Integrity-first tutoring: explanations and feedback only — we do not complete graded work. Learn more.