Question

Muslin Co. sells a product with a sales price per unit of $10.65, fixed costs of $60,000, variable cost per unit of $5.40. If Muslin Co. sell 23,000 units, what is the operating profit?

Answer 1

Muslin Co. has an operating profit of $60,750 when it sells 23,000 units, derived from the sales price per unit, variable cost per unit, and fixed costs.

Step-by-step explanation:

When Muslin Co. sells 23,000 units, we can calculate the operating profit using the given information about sales price, fixed costs, and variable cost per unit. The formula for calculating operating profit is (Sales price per unit - Variable cost per unit) * Number of units sold - Fixed costs. Therefore, the operating profit is calculated as follows:

($10.65 - $5.40) * 23,000 units - $60,000 fixed costs

The profit per unit is $10.65 - $5.40 = $5.25, and for 23,000 units, it amounts to $5.25 * 23,000 = $120,750. Subtracting the fixed costs of $60,000 from this amount yields an operating profit of:

$120,750 - $60,000 = $60,750.

Thus, Muslin Co. would have an operating profit of $60,750 from selling 23,000 units.