Answer:
$ 140,000
Explanation:
Data:
Variable cost for the product:
Direct material = $ 80
Direct labor cost = $ 40
Manufacturing support =$ 70
Marketing cost = $ 30
Thus, the total variable cost = $ 80 + $ 40 + $ 70 + $ 30 = $ 220
Fixed costs for the product:
Manufacturing support = $ 90
Marketing costs = $30
Total costs = $ 340
Targeted selling price = $ 510
Accepted price for a unit by Kolar, i.e the selling price = $ 360
Now,
the change in operating profit will be from the variable costs only as the fixed costs cannot be altered.
Thus,
the contribution margin for the single unit = Selling price - Total variable cost
or
the contribution margin for the single unit = $ 360 - $ 220 = $ 140
Therefore,
the change in operating profits for the 1,000 units
= contribution margin per unit × 1000
or
the change in operating profits for the 1,000 units = $ 140 × 1000
or
the change in operating profits for the 1,000 units = $ 140,000
