Question

Assume that Jackson is a​ price-taker and the current wholesale market price is $7.30 per can of paint. What is the target total of cost in producing and selling 6 million cans of​ paint? Given Jackson​'s current total​ costs, will the company reach​ stockholders' profit​ goals? Begin by calculating Jackson​'s target total cost. Select the formula labels and enter the amounts. ​(Enter currency amounts in​ dollars, not in millions. Round all currency amounts to the nearest whole​ dollar.) Revenue at market price $43,800,000 Less: Desired profit 6000000 Target total cost 31,800,000

Answer 1

Answer:

Jackson's target total cost of producing and selling 6 million cans of paint of $31,800,000 will enable it to reach stockholders' profit goals of $6 million.

The implication is that it should not allow its total costs (Production and other business expenses) to exceed $37,800,000.

This is because its sales revenue will be equal to $43,800,000 (6,000,000 * $7.30).

As such, Jackson can produce a can of paint for $5.30.  It can also incur an average business expense of $1.00 per can to maintain and reach its $6 million profit target.

Explanation:

Profit is the difference obtained after deducting all costs from the revenue.  There are some profit stages.  The first is the gross profit, which considers the sales revenue and the cost of goods sold.  The next profit stage is the operating profit, which subtracts the business running expenses from the gross profit.  There are also profits before and after interest and taxes.  The after tax profit is also called the net income or net profit.  If it is negative, then it is called the net loss.  It is from the net income that distributions are made to stockholders in the form of dividends while a part is retained in the business to increase its capital stock or stockholders' equity.