Question

The Poseidon Swim Company produces swim trunks. The average selling price for one of their swim trunks is $73.51. The variable cost per unit is $23.47, Poseidon Swim has average fixed costs per year of $11,456. What would be the operating profit or loss associated with the production and sale of 354 swim trunks?

Answer 1

Contribution Margin Income Statement:
(At sales level of 354 units)
				Per Unit	Total
Sales				$     73.51	$ 26,022.54
Less Variable costs				$     23.47	$   8,308.38
Contribution Margin				$     50.04	$ 17,714.16
Less Fixed Costs					$ 11,456.00
Operating Profit					$   6,258.16