Question

A manufacturer has a monthly fixed cost of $40,000.00 and a production cost of $7 for each unit produced. The product sells for $19 per unit. If the manufacturer produces and sells 5,000 units one month, then his profit is

Answer 1

Profit= $20,000

Step-by-step explanation:

Giving the following information:

Fixed costs= $40,000

Unitary variable cost= $7

Selling price= $19

To calculate the profit, we need to use the following formula:

Profit= total contribution margin - fixed costs

Profit= 5,000*(19 - 7) - 40,000

Profit= $20,000