Question

A manufacturing company leases a building for ​$90 comma 00090,000 per year for its manufacturing facilities. In​ addition, the machinery in this building is being paid for in installments of ​$20 comma 00020,000 per year. Each unit of the product produced costs ​$1414 in labor and ​$1010 in materials. The product can be sold for ​$3838. Assume that the demand is 9 comma 0009,000 units per year. what is the annual profit? ( Please show as much work as possible)

a.
$280,000

b.
$50,000

c.
$150,000

d.
-$50,000

e.
$30,000

Answer 1

Answer:

None of the options is correct.

Explanation:

Giving the following information:

A manufacturing company leases a building for ​$90,000 per year for its manufacturing facilities. Also, the machinery in this building is being paid for in installments of ​$20,000 per year.

Each unit of the product produced costs ​$14 in labor and ​$10 in materials. The product can be sold for ​$38. Assume that the demand is 9,000 units per year.

Income statement:

Sales= (38*9000)= 342,000

COGS= (14+10)*9000= 216,000 (-)

Gross profit= 126,000

Fixed costs= 90,000 + 20,000= 110,000 (-)

Net operating profit= 16,000