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slamgirl [31]
3 years ago
9

A manufacturing company leases a building for $100,000 per year for its production facilities. In addition the machinery used in

this building is being paid for in installments of $20,000/year. Each unit of production costs $15 in labor and $10 in materials. If 10,000 units per year are sold at $40 each , what is the annual profit? ( Please show as much work as possible)
(A) $280,000
(B) $50,000
(C) $150,000
(D)-$50,000
(E) $30,000
Business
1 answer:
aksik [14]3 years ago
8 0

Answer:

(E) $30,000

Explanation:

For computing the annual profit, the following formula is used.

Annual Profit = Total revenues - total cost

where,

Total revenue = Number of units × selling price per unit

                        = 10,000 units × $40

                        = $40,000

And, the total cost = lease cost + installment amount + variable cost

                              = $100,000 + $20,000 + ($10,000 units × $15 + $10,000 units × $10)

                              = $120,000 + $250,000

                              = $370,000

Now put these values to the above formula

So, the answer would be equal to

= $400,000 - $370,000

= $30,000

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