Question

Company A has sales of $500,000, variable costs of $350,000, and fixed costs of $150,000. Which of the following are true?

1) The total cost is $500,000
2) The total profit is $150,000
3) The total profit is $200,000
4) The total cost is $350,000

Answer 1

The true statement among the given options is that the total cost for Company A is $500,000. The total profit is not $150,000 or $200,000, and the total cost is not $350,000. In fact, the total profit is $0 as the sales equal the total costs.

Step-by-step explanation:

The student's question is about calculating the total costs and total profit of Company A given its sales, variable costs, and fixed costs. To determine the truthfulness of the four given statements, one would need to understand the relationship between sales, variable costs, fixed costs, and profits.

First, we calculate the total cost by adding the variable costs and fixed costs:

• Variable costs: $350,000
• Fixed costs: $150,000
• Total cost = Variable costs + Fixed costs = $350,000 + $150,000 = $500,000

Next, we assess the total profit by subtracting the total cost from the sales:

• Sales: $500,000
• Total cost: $500,000
• Total profit = Sales - Total cost = $500,000 - $500,000 = $0

Based on the calculation:

1. The statement 'The total cost is $500,000' is true.
2. The statement 'The total profit is $150,000' is false.
3. The statement 'The total profit is $200,000' is false.
4. The statement 'The total cost is $350,000' is false.