Question

Tory Company sells a single product. Troy estimates demand and costs at various activity levels as...

Tory Company sells a single product. Troy estimates demand and costs at various activity levels as follows:

Units Sold Price Total Variable Costs Fixed Costs
120,000 $48 $3,000,000 $1,000,000
154,500 $45 $3,500,000 $1,000,000
160,000 $40 $4,000,000 $1,000,000
180,000 $35 $4,500,000 $1,000,000
200,000 $30 $5,000,000 $1,000,000

How much profit will Troy have if a price of $45 is charged?

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Answer #1

SALES      (154500 UNITS * 45)             6952500

LESS: VARIABLE COST                         3500000

LESS: FIXED COST                                1000000

PROFIT                                                   2452500

ANS PROFIT WOULD BE $ 2,452,500

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