Question

The following information pertains to Dallas Churning Company's three products: D E F Unit sales per month 900 1,400 800 Selling price per unit $6.00 $11.25 $ 7.50 Variable costs per unit 3.00 9.00 7.80 Unit contribution margin $3.00 $ 2.25 $(0.30) Assume that product F is discontinued and the space used to produce product F is rented for $600 per month. Monthly profits will?

Answer 1

Profit = $6450

Step-by-step explanation:

To calculate total profits from this decision we need to calculate total positive contribution.

Total contribution from D = 3 * 900 = 2700

Total contribution from E = 2.25*1400 = 3150

We assume rent is all profit so total monthly profit

= 2700 + 3150 + 600 = 6450

Hope that helps.