contestada

Theodora Patel makes stuffed teddy bears. Recent information for her business follows:


Selling price per bear-------------$25.00
Total fixed cost per month-------1,500.00
Variable cost per bear------------15.00

She sells 350 bears this month.

Suppose sales increase by 20 percent next month, calculate the effect that increase will have on her profit. (Round your intermediate calculations to 2 decimal places. Omit the "%" sign in your response.)

Effect on profit:_______%

Respuesta :

facundobuzzetti

Answer:

Increase in income= 70*10= $700

Effect on income= (700/2,000)*100= 35% increase

Explanation:

Giving the following information:

Selling price per bear= $25.00

Total fixed cost per month= $1,500.00

Variable cost per bear= $15.00

She sells 350 bears this month.

First, we need to calculate the actual total income:

Income= total contribution margin - total fixed costs

Income= 350*(25 - 15) - 1,500= $2,000

Now, the number of units increase by 20%.

Because of the fixed costs remain the same, the increase in income is the increase in the contribution margin

Units= 350*0.20= 70 units

Increase in income= 70*10= $700

In % terms:

Effect on income= (700/2,000)*100= 35% increase

Otras preguntas