24. During 2014, TCU Inc. reported revenues of $925,400 and profits of $88,500.
ID: 2455508 • Letter: 2
Question
24.
During 2014, TCU Inc. reported revenues of $925,400 and profits of $88,500. Fixed costs were $456,250 and 37,016 units were sold. If costs and prices are expected to stay the same in 2015, and TCU expects to sell 40,000 units, what will be the company’s budgeted profit?
A)
$95,457
B)
$132,414
C)
$525,000
D)
$667,957
24.
During 2014, TCU Inc. reported revenues of $925,400 and profits of $88,500. Fixed costs were $456,250 and 37,016 units were sold. If costs and prices are expected to stay the same in 2015, and TCU expects to sell 40,000 units, what will be the company’s budgeted profit?
A)
$95,457
B)
$132,414
C)
$525,000
D)
$667,957
Explanation / Answer
Given data,
2014:
Number of units sold = 37016
Reported Revenues = 925400
Profits = 88500
Fixed Costs = 456250
Expected number of units to be sold in 2015 = 40000
Costs and price are expected to remain same i.e., Variable cost per unit and fixed costs in total remains same.
Selling Price per unit:
Selling Price per unit = Revenue / number of units
=925400 / 37016
=25
Variable cost per unit:
Sales – Variable Cost = Contribution
Sales – Variable cost = Fixed Cost + Profit
925400 – Variable cost = 456250 + 88500
Variable Cost = 380650
Variable cost per unit = Variable cost / number of units
=380650 / 37016
=10.2834
Fixed costs = 456250
Budgeted Profit in 2015:
Sales = number of units * Selling price per unit
= 40000 * 25
= 1000000
Variable cost = number of units * variable cost per unit
= 40000 * 10.2834
=411336
Budgeted profit = Sales – Variable cost – Fixed Cost
=1000000 – 411336 – 456250
=132414
Correct answer is B) Budgeted Profit = $132414
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