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?
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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