Assume that you can sell a new product at $5.00 per unit. Your variable costs are $3.00 per unit and you fixed costs are $20,000. What will be your profit before taxes if you sell 12,000 units next year?
A) $0
B) $1,000
C) $2,000
D) $4,000
E) $8,000

Question

Quizplus · Accepted Answer

Profit before taxes = (Selling price per unit - Variable cost per unit) * Number of units sold - Fixed costs= ($5.00 - $3.00) * 12,000 - $20,000= $2.00 * 12,000 - $20,000= $24,000 - $20,000= $4,000

Assume That You Can Sell a New Product at $5