Question

During a holiday month, a retail store brings in 300% above its average sales in other months.if a typical month has $1600 in sales, and has fixed costs of $800 per month.what is the profit for a holiday month?

Answer 1

Answer:

Profit for holiday month is $4,000

Explanation:

Given:

Average sales in a typical month = $1,600

Fixed cost is $800 per month

Sales in festive month is 300% above average typical month sale. So, sales in festive month is $4,800 (1,600 × 300%). Fixed cost remains same irrespective of number of units sold.

Profit = Sales - Fixed cost

        = 4,800 - 800

        = $4,000

If profit in a typical month is $800 (1,600 - 800), retail store earns profit of $4,000 in a festive month.