Question

2) A soft drinks manufacturer sells each can for 50p. The variable costs per can are 10p. Fixed costs per year are £4 million. How much profit will be made if the business sells 15 million cans?

A- £2 million
B- £3 million
C- £6 million
D- £3.5 million​

Answer 1

Profit on 15,000,000 cans = £2 million

Step-by-step explanation:

Given:

Sales price per can = £0.5

Variable cost per can = £0.1

Fixed costs per year = £4,000,000

Find:

Profit on 15,000,000 cans

Computation:

Profit on 15,000,000 cans = (Sales price per can)(15,000,000) - Fixed costs per year - (Variable cost per can)(15,000,000)

Profit on 15,000,000 cans = (£0.50)(15,000,000) - £4,000,000 - (£0.10)(15,000,000)

Profit on 15,000,000 cans = £7,500,000 - £4,000,000 - £1,500,000)

Profit on 15,000,000 cans = £2,000,000

Profit on 15,000,000 cans = £2 million