During 2014, Waxley Corporation reported total revenues of $891,640 and profit of $91,486. Fixed costs were $332,043, and 44,582 units were sold. Costs and prices are expected to stay the same in 2015. Waxley expects to sell 50,000 units. How much is the company's budgeted profit?

Question

Quizplus · Accepted Answer

To find the budgeted profit, first calculate the contribution margin per unit: (Total Revenue - Fixed Costs - Profit) / Units Sold = ($891,640 - $332,043 - $91,486) / 44,582 = $10.50 per unit. For 50,000 units, the contribution margin is 50,000 * $10.50 = $525,000. Subtract fixed costs: $525,000 - $332,043 = $192,957. The budgeted profit is $192,957.

During 2014, Waxley Corporation Reported Total Revenues of $891,640 and Profit