Question

A bottle of organic shampoo sells for $7.95. Fixed costs total $9,000 and variable costs per unit are $0.85. Sales are forecast to be 12,000. What is the possible net profit on the total sale?

a)$29,400
b)$76,200
c)$19,200
d)$95,400

Answer 1

Revenue (without accounting for costs) is 12,000 * $7.95 = $95,400.

There is a fixed cost of $9,000 as well as cost of $0.85 per unit.
Total costs are $9,000 + $0.85*12,000 = $19,200.

Net profit is the revenue minus the costs.
Net profit = $95,400 - $19,200 = $76,200