Question

Rally Synthesis Inc. manufactures and sells 60 bottles per day. Fixed costs are $23,000 and the variable costs for manufacturing 60bottles are $12,000. Each bottle is sold for $1,200. How would the daily profit be affected if the daily volume of sales drop by 10​%?

Answer 1

Profit would decrease by $10,000

Step-by-step explanation:

Contribution margin per bottle = 1200 - (12,000 / 60) = 1,000

=$1200 - $200

= $1,000

Change in profit = 10 * $1,000 = $10,000

Profit would decrease by $10,000