Final answer:
To calculate the higher profits, we need to calculate the difference in profit between the anticipated level of sales and the actual sales. The anticipated level of sales is assumed to result in a profit of $313,000. To calculate the profit at the actual sales level, we need to determine the total revenue and total costs at that level. Total revenue can be calculated by multiplying the sales price by the actual sales level, and total costs can be calculated by multiplying the variable cost per unit by the actual sales level and adding the fixed costs. Subtracting the total costs from the total revenue will give us the profit at the actual sales level. The difference in profits will be $284,800 (option a).
Step-by-step explanation:
To calculate the higher profits, we need to calculate the difference in profit between the anticipated level of sales and the actual sales. The anticipated level of sales is assumed to result in a profit of $313,000. To calculate the profit at the actual sales level, we need to determine the total revenue and total costs at that level. Total revenue can be calculated by multiplying the sales price by the actual sales level, and total costs can be calculated by multiplying the variable cost per unit by the actual sales level and adding the fixed costs. Subtracting the total costs from the total revenue will give us the profit at the actual sales level.
Using the formula: Profit = Total Revenue - Total Costs
Profit at anticipated level of sales (Given) = $313,000
Profit at actual sales level = Total Revenue - Total Costs
Total Revenue = Sales Price x Actual Sales Level
Total Costs = (Variable Cost per Unit x Actual Sales Level) + Fixed Costs
By substituting the given values and solving the equation, we can determine the profit at the actual sales level and compare it to the profit at the anticipated level to calculate the difference.
The difference in profits will be $284,800 (option a).