Cooper Company sells a product at $50 per unit that has unit variable costs of $20. The company's break-even sales point in sales dollars is $150,000. How much profit will the company make if it sells 4,000 units?
A. $210,000
B. $120,000
C. $60,000
D. $30,000
Solution :-
Breakeven sales Volume is the level of sales where the Contribution earned is enough to cover the fixed cost of the organisation.
In this case $150,000 is the breakeven sales, therefore,
150,000/50=3000 units is the level there is no profit.
But after 3000 units whatever contribution is earned is profit.
Sale price per unit = $50
Variable cost per unit = $20
Contribution per unit = ($50-$20) = $30
After 3000 units for the rest ; (4000 - 3000) = 1000 units, whatever contribution is eamed is profit, So,
Profit = 1000×30 = $30,000
Thus, the company will make a profit of $30,000
(Select Option D)
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