Information concerning Simmons Corporation's Product A follows: Assuming that Simmons increased sales of Product A by 25 percent, what should the profit from Product A be?

Question

Information concerning Simmons Corporation's Product A follows:  Assuming that Simmons increased sales of Product A by 25 percent, what should the profit from Product A be?

Quizplus · Accepted Answer

The information provided does not give us the current profit of Product A, but we can calculate it using the following formula:

Profit = (Sales - Costs)

Assuming that Simmons Corporation increased sales of Product A by 25 percent, we can calculate the new sales as follows:

New Sales = Old Sales x (1 + percent increase)
New Sales = $500,000 x (1 + 0.25)
New Sales = $625,000

Assuming that the costs remain the same, we can calculate the new profit as follows:

New Profit = New Sales - Costs
New Profit = $625,000 - $550,000
New Profit = $75,000

Therefore, the answer is choice C, $75,000.

Information Concerning Simmons Corporation's Product a Follows: Assuming That