Friar Corp.sells two products.Product A sells for $100 per unit,and has unit variable costs of $60.Product B sells for $70 per unit,and has unit variable costs of $50.Currently,Friar sells three units of Product B for every one unit of Product A sold.Friar has fixed costs of $750,000.How many units would Friar have to sell to earn a profit of $250,000?

Question

Quizplus · Accepted Answer

Let's use algebra to find the number of units of each product that need to be sold, x for Product A and 3x for Product B.

Profit = Total Revenue - Total Variable Costs - Fixed Costs
250,000 = (100x + 70(3x)) - (60x + 50(3x)) - 750,000
250,000 = 10x - 750,000
10x = 1,000,000
x = 100,000/10 = 10,000

So Friar needs to sell 10,000 units of Product A and 3 times as many units of Product B, which is 30,000 units. 
Therefore, the answer is B) 10,000 units of A and 30,000 units of B.