Question

Gift Gallery sold 2000 Zooglars during 2020. Information is provided concerning the Zooglar product: Sales $60700...

Gift Gallery sold 2000 Zooglars during 2020. Information is provided concerning the Zooglar product:

Sales

$60700

Variable costs

24900

Fixed costs

10400

Net income

$25400


If Gift Gallery sells 20 more units, by how much will its profit increase?

Business   Accounting   
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Answer #1

Answer :

Selling Price per unit = Sales / No. of units

= $60,700 / 2000

= $ 30.35

Variable cost per unit = Total variable cost / No. of units

= $ 24900 / 2000

= $ 12.45

Increase in Profit by selling 20 more units = (S.P. X 20 units) - ( V.C.per unit X 20 units )

= ($ 30.35 X 20 units) - ($ 12.45 X 20 units )

= $ 607 - $ 249

= $ 358

Total Profit after selling additional units = $ 25,400 + $ 358

  = $ 25, 758

Note : Increase in no. of units does not amount to change in fixed cost. So, it dosen't make any change in fixed cost.

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