Question

If revenues are $25 per unit, variable costs are $15 per unit, and fixed costs are $400, what is the operating profit when 100 units are sold?

Answer 1

$1000

Step-by-step explanation:

Operating income is obtained by mulitplying contribution margin by number of units sold.

i.e., operating income = contribution X units produced

revenue per unit $25

variable cost $ 15

Units 100

Contribution margin = sales price per unit(revenue) - variable costs

=$25-$15 = $10

Operating income= $10 x 100

=$1000