Answer:
$9,000
Explanation:
Profit = Total revenue - Total cost
Total cost = Total fixed cost + Total variable cost
Fixed cost = $40,000
Variable costs = variable cost per unit × total output = $4 × 10,000 = $40,000
Total cost = $40,000 + $40,000 = $80,000
Total revenue = price × output = $10 × 10,000 = $100,000
Profit = $100,000 - $80,000 = $20,000
If sales increases by 1500, output would be 11,500
Total variable cost = 11500 × $4 = $46,000
Total cost = $40,000 + $46,000 = $86,000
Revenue = $10 x 11500 = $115,000
Profit = $115,000 - $86,000 = $29,000
Increase in profit = $29,000 - $20,000 = $9,000
I hope my answer helps you
Answer:
$9,000
Explanation:
Current income statement:
total revenue = $10 per unit x 10,000 units = $100,000
total variable costs = $4 per unit x 10,000 units = (40,000)
total fixed costs = ($40,000)
net profits = $20,000
If sales increase by 1,500 units:
total revenue = $10 per unit x 11,500 units = $115,000
total variable costs = $4 per unit x 11,500 units = (46,000)
total fixed costs = ($40,000)
net profits = $29,000
net income increased by $29,000 - $20,000 = $9,000
you can also calculate this using the contribution margin per unit = selling price - variable cost per unit = $10 - $4 = $6 per unit
Since the company has already passed its break even point and was making a profit, every additional unit sold increases net profits = 1,500 units x $6 per unit = $9,000
