Exhibit 6-5
Estrada Incorporated produces two different products with the following monthly data.
$\begin{array}{llcc}
&\text { Charcoal } & \text { Gas } & \text { Total } \
&\text { Barbecues } & \text { Barbecues } &\
\text { Selling price per unit } & \$ 150 & \$ 600 & \
\text { Variable cost per unit } & \$ 60 & \$ 360 & \
\text { Expected unit sales } & 1,400 & 600 & 2,000 \
\text { Sales mix } & 70 \% & 30 \% & 100 \% \
\text { Fixed costs } & & & \$ 180,000
\end{array}$

-Refer to Exhibit 6-5.What is the operating profit?
A)$90,000
B)$570,000
C)$270,000
D)$255,000
E)None of the answer choices is correct.

Question

Exhibit 6-5
Estrada Incorporated produces two different products with the following monthly data.
 $\begin{array}{llcc}
&\text { Charcoal } & \text { Gas } & \text { Total } \
&\text { Barbecues } & \text { Barbecues } &\
\text { Selling price per unit } & \$ 150 & \$ 600 & \
\text { Variable cost per unit } & \$ 60 & \$ 360 & \
\text { Expected unit sales } & 1,400 & 600 & 2,000 \
\text { Sales mix } & 70 \% & 30 \% & 100 \% \
\text { Fixed costs } & & & \$ 180,000
\end{array}$

-Refer to Exhibit 6-5.What is the operating profit?
A)$90,000
B)$570,000
C)$270,000
D)$255,000
E)None of the answer choices is correct.

Quizplus · Accepted Answer

The operating profit is calculated as follows:Total revenue = (Selling price per unit * Expected unit sales)Total revenue = (150 * 1,400) + (600 * 600)Total revenue = 210,000 + 360,000Total revenue = 570,000Total variable cost = (Variable cost per unit * Expected unit sales)Total variable cost = (60 * 1,400) + (360 * 600)Total variable cost = 84,000 + 216,000Total variable cost = 300,000Operating profit = Total revenue - Total variable cost - Fixed costsOperating profit = 570,000 - 300,000 - 180,000Operating profit = 90,000

Exhibit 6-5 Estrada Incorporated Produces Two Different Products with the Following

Exhibit 6-5
Estrada Incorporated Produces Two Different Products with the Following