Question

Atlas Corporation sells 100 bicycles during a month at a price of $500 per unit. The variable expenses amount to $300 per bicycle. How much does profit increase if it sells one more bicycle

Answer 1

Answer:

Increase in profit= $200

Explanation:

Giving the following information:

Atlas Corporation sells 100 bicycles a month for $500 per unit. The variable expenses amount to $300 per bicycle.

Contribution margin= selling price - unitary variable cost

CM= 500 - 300= $200 per unit

We don't have information regarding fixed costs. So each unit sold increases profit by the contribution margin.

Increase in profit= $200