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Given the following information:

Selling price per unit = $10
Variable Cost per unit = $7
Plant capacity = 125,000 units
Sales demand = 80,000 units
Profit = $90,000

TOTAL FIXED COSTS is equal to:
_______?

It is multiple choice, but I'd like to leave out the answers , to make sure the provided answers are arrived at, without simply choosing an random provided answer, and trying to "make it fit".
Please show your rational for your answer.

THANK YOU!

2007-11-28 17:10:26 · 3 answers · asked by mikeburman11 1 in Science & Mathematics Mathematics

3 answers

If demand is 80,000 units and the selling price is $10 per unit , total sales = $800,000. Variable costs = 7 times 80,000 units = $560,000.

sales - variable costs = fixed costs + profit
800,000 - 560,000 = $240,000.
Profit = $90,000 , so fixed cost = 240,000 - 90,000 = $150,000

Fixed costs = $150,000

sales = variable costs + fixed costrs + profit

$800,000 = $560,000 + $150,000 + $90,000

2007-11-28 17:26:00 · answer #1 · answered by SJM60 5 · 0 0

10-7=3 (they sell for 10 but cost 7 to make)
each unit is a $3 profit

90000/3=30,000 (makes 30,000 over Total cost)
80,000-30,000=50000
50000*7=350,000

Hope it is right not 100% sure

2007-11-28 17:15:10 · answer #2 · answered by Anonymous · 0 0

$10 - $7 = $3
$3(80,000) - $90,000 = $150,000

2007-11-28 17:29:45 · answer #3 · answered by Helmut 7 · 0 0

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