Question

Sheridan Company produces hair brushes. The selling price is $15 per unit and the variable costs are $8 per brush. Fixed costs per month are $4800. If Sheridan sells 20 more units beyond breakeven, how much does profit increase as a result?

A) $140
B) $600
C) $300
D) $160

Answer 1

a) $140.

Step-by-step explanation:

To calculate profit, we can use following formula:

Sales in $ - Cost of Goods Sold = Gross Profit.

As we need to know how much does the profit increase as a result, we calculate with 20 units and not with total sales.

Then, to give the answer to this question, sales are 20 units.

(20*$15)-(20*$8)=$140