Question

portable hard drive, fixed costs are $20,000,000 regardless of sales volume. Variable costs are $25 per unit and the unit price of the portable hard drive is $50.] Finally, Julie wants to consider the case of the target return of $40 million. Fixed costs, variable costs per unit, and price remain the same. In such a case, total cost is O $2,400,000 $ 66,000,000 O $ 72,000,000 $ 80,000,000 © $ 96,000,000

Answer 1

In such a case when we considering Julie's target, the total revenue is d) $80,000,000.

By using the formula,

Profit = Total revenue - total cost

But we have,

Total revenue = price × quantity sold

= $50 × quantity sold

Let us consider the quantity sold as 'x'

Therefore, the total revenue = $50x

Also,

Total cost = Fixed cost + Variable cost

Variable cost = Variable costs per unit × quantity sold

We already considered quantity sold as x

So,

Variable cost  = $25x

Hence,

Total cost = $20,000,000 + $25x

$20,000,000 = $50x - ($20,000,000 + $25x)

Now, by solving further for x, we will get:

$40,000,000 = $25x

x = 1,600,000

Now, we have to recall the equation at the beginning

Total revenue = $50x

Total revenue = $50 × 1,600,000

Total revenue = $80 million

Hence, the total revenue would be $80 million.

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