A firm sells 20,000 units of a particular product at a price of $50 per unit. The company spends $30 per unit in raw materials and labor charges. What are company's fixed costs if it made a profit of $100,000?

Question

Quizplus · Accepted Answer

The total revenue from selling 20,000 units at $50 each is:
20,000 x $50 = $1,000,000
The total cost of producing 20,000 units is:
20,000 x $30 = $600,000
The profit made by the company is:
$1,000,000 - $600,000 = $400,000
We are given that the profit made by the company is $100,000. So, we can set up the equation:
$400,000 - Fixed Costs = $100,000
Solving for Fixed Costs, we get:
Fixed Costs = $300,000
Therefore, the company's fixed costs are $300,000.

A Firm Sells 20,000 Units of a Particular Product at a Price