Answer:
Profits will be $22.495 higher.
Explanation:
Profit is the difference between sales and cost
Profit= price* sales -((Variable cost * sales) +Fixed cost)
First we have to get the sales when we have $305,000 of profit.
Profit -Fixed cost= price* sales -(Variable cost * sales)
Profit -Fixed cost= (price -Variable cost) * sales
(Profit -Fixed cost)/(price -Variable cost) = sales
Sales=(Profit -Fixed cost)/(price -Variable cost)
Sales=(305,000 -30,000)/(25 -10)
Sales=275,000/15=18.333
If Sugar sells 5,500 units more than expected
Then, new sales are:
Sales=18.333+5,500=23.833
Profit= price* sales -((Variable cost * sales) +Fixed cost)
Profit²= 25* 23833 -((10 * 23833) +30000)
=327.495
Improvement= Profit -Profit²=$305,000-327.495= $22.495
