Janus Manufacturing had sales revenue last year of $200,000, variable manufacturing costs of $120,000, and fixed manufacturing costs of $40,000. If Janus expects sales revenue to increase by 10% for the upcoming year, with variable manufacturing costs maintaining the same percentage relationship to sales revenue as in the previous year, and fixed manufacturing costs remaining the same, what will the expected profit be for Janus in the upcoming year?

Question

Quizplus · Accepted Answer

Variable costs / Sales Revenue = $120,000 / $200,000 = 60%; Expected Sales Revenue = $200,000 x (1 + 10%) = $220,000, Expected Sales Revenue - ($220,000 x 60%, Expected Variable Costs) - $40,000, Fixed Costs = Expected Profit, $48,000.

Janus Manufacturing Had Sales Revenue Last Year of $200,000, Variable