Scott is a self-employed plumber and his wife, Emily, is a full-time employee fo
ID: 2444563 • Letter: S
Question
Scott is a self-employed plumber and his wife, Emily, is a full-time employee for the University. Emily has health insurance from a qualified plan provided by the University, but Scott has chosen to purchase his own health insurance rather than participate in Emily's plan. Besides paying $5,400 for his health insurance premiums, Scott also pays the following expenses associated with his plumbing business:
Plumbing tools and Supplies $ 1,300
Rent on Scott's plumbing shop $ 6,250
Transportation between Scott's Shop and various job Sites $ 500
Plumber's uniform $ 50
Plumbing truk rental $7,200
Self employment tax (1/2 is employer share) $ 400
What is the amount of deductions for AGI that Scott can claim this year (2013)?
Explanation / Answer
Answer:3
At 11000 units level:
Total variable cost = Material cost + wages cost
=(11000 units * $3) + (11000 units * $30 /10) = $66000
Total Fixed cost = $23000 +$15000 = $38000
Hence
Total Cost per unit = (66000 + 38000) / 11000 = $9.45 Per unit
Selling price is $9.50 per unit
So now it shall be profitable because selling price is more than the total cost per unit.
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