Answer:
Profit decreases by $322,600
Explanation:
Normal production level = 30,000 units
Cost of direct material per unit =$6.40 , total cost = $6.40*30,000=$192,000
Cost of direct labor per unit =$3.93 , total cost =$3.93*30,000=$117,900
Variable over head cost per unit=$5.80, total cost =$5.80*30,000=$174000
Fixed overhead total cost = $150,000
Production cost with 30,000 units will be;
$192,000 + $117,900 + $174000 + $150,000 =$633900
Normal selling price of product per unit = $48
Revenue after normal sell of 30,000 units $48 = 30,000*48=$1440000
Profit obtained : $806,100
Increasing the production to 50,000 units you can calculate the projected cost of production
New production level = 50,000 units
Cost of direct material per unit =$6.40 , total cost = $6.40*50,000=$320,000
Cost of direct labor per unit =$3.93 , total cost =$3.93*50,000=$196,500
Variable over head cost per unit=$5.80, total cost =$5.80*50,000=$290,000
Fixed overhead total cost = $150,000
Production cost with 30,000 units will be;
$320,000 + $196,500 + $290,000 + $150,000 =$956,500
Normal selling price of product per unit = $48
Revenue after normal sell of 30,000 units $48 = 30,000*48=$1440000
Profit obtained =$483,500
Decreased in profit = $806100-$483500 =$322,600
