Answer:
$120,000
Explanation:
According to this question, the selling price (S.P) of one case of imported olive oil is $20 while the cost price (C.P) is €15.
The currencies are not the same. They have to be the same in order to work with them. The exchange rate of both currencies, according to the question is:
€1.25 = $1
We'll be making both the S.P and C.P dollars ($).
Hence, €15 will be 15 ÷ 1.25 = $12
This means that the C.P is $12 and the S.P is $20 per case.
If a customer ordered 15,000 cases of olive oil;
A) the cost price (C.P) of 15,000 cases of olive oil will be $12 × 15,000 = $180,000
B) the selling price (S.P) of 15,000 cases of olive oil will be $20 × 15,000 = $300,000
In any business, the profit is always the selling price minus the cost price i.e. P = S.P - C.P
Hence, the pretax profit on the 15,000 cases of olive oil will be;
$300,000 - $180,000 = $120,000.
