Question

The Poseidon Swim Company produces swim trunks. The average selling price for one of their swim trunks is $76.86. The variable cost per unit is $20.53, Poseidon Swim has average fixed costs per year of $17,923. What would be the operating profit or loss associated with the production and sale of 371 swim trunks.

Answer 1

Operating profit or loss associated with the production and sale of 371 swim trunks:
			Per Unit	Total for 371 units
Sales			$     76.86	$ 28,515.06
Less Variable costs			$     20.53	$   7,616.63
Contribution Margin			$     56.33	$ 20,898.43
Less Fixed Costs				$ 17,923.00
Net Operating Income				$   2,975.43