Question

If contribution per unit is​ £3, and​ 9,000 units are sold for​ £7 each and fixed costs are​ £6,000, the maximum profit is​ £21,000.

A. True
B. False

Answer 1

After calculating the profit by multiplying the contribution per unit by the number of units sold and subtracting the fixed costs, we can confirm that the statement regarding the maximum profit being £21,000 is indeed true.

Step-by-step explanation:

The question asks whether it is true or false that with a contribution per unit of £3, sales of 9,000 units at £7 each, and fixed costs of £6,000, the maximum profit is £21,000. We can find out if this statement is true by performing a profit calculation.

To calculate profit:

1. First, determine the total revenues by multiplying the number of units sold by the price per unit (£7). Total revenues would be 9,000 units × £7 = £63,000.
2. Second, calculate the total contribution by multiplying the contribution per unit (£3) by the number of units sold (9,000 units). Total contribution would be 9,000 units × £3 = £27,000.
3. Finally, subtract the fixed costs (£6,000) from the total contribution (£27,000) to determine the profit. The profit calculation would be £27,000 - £6,000 = £21,000.

Based on the calculation, the statement that the maximum profit is £21,000 is true, making option A correct.