A Company sells a product at the rate of $200 per unit. The variable cost per un
ID: 2577763 • Letter: A
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 28000Related Questions
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