Question

The following costs relate to Salad Box Company for a relevant range of up to 10,000 units annually: Variable Costs: Direct materials $1.25 Direct labor 0.75 Manufacturing Overhead 1.00 Selling and administrative 1.00 Fixed Costs: Manufacturing overhead $20,000 Selling and Administrative 10,000 Salad Box sells each unit for $10.00. Which of the following equations best describes the equation to determine total profit for a sales volume of 8,000 units
Select one: A. Profit = $10.00X – ($30,000 + $5.50X) B. Profit = $30,000 + $5.50X C. Profit = $10X D. Profit = $10.00X – ($10,000 – $4.50X)

Answer 1

Answer:

Equations best describes the equation to determine total profit for a sales volume: Total profit  = $10.00X – ($4X + $30,000)

Explanation:

Total variable costs to produce 1 units = Direct materials + Direct labor + Manufacturing Overhead + Selling and administrative = $1.25 + $0.75 + $1.00 + $1.00 = $4 per unit

Fixed Costs = Manufacturing overhead + Selling and Administrative = $20,000 + $10,000 = $30,000

Box sells each unit for $10.00. X is the number of units are sold

Total profit = Sales revenue - (Total variable costs + Fixed Costs) = $10.00X – ($4X + $30,000)