Information concerning Thompson Corporation's Product A follows:
Sales $ \$ 300,000 $
Variable costs 240,000
Fixed costs 40,000
Assuming that Thompson increased sales of Product A by 20 percent,what should the profit from Product A be?
A)$20,000
B)$24,000
C)$32,000
D)$80,000

Question

Information concerning Thompson Corporation's Product A follows:
Sales                                      $ \$ 300,000 $
Variable costs                          240,000
Fixed costs                                40,000
Assuming that Thompson increased sales of Product A by 20 percent,what should the profit from Product A be?
A)$20,000
B)$24,000
C)$32,000
D)$80,000

Quizplus · Accepted Answer

To find the profit after increasing sales by 20%, we need to calculate the new revenue and subtract the total costs.

New Sales = $300,000 x 1.2 = $360,000

Total Variable Costs = $240,000

Total Fixed Costs = $40,000

Total Costs = $240,000 + $40,000 = $280,000

Profit = New Sales - Total Costs = $360,000 - $280,000 = $80,000

Therefore, the profit from Product A should be $80,000 after increasing sales by 20%. The correct answer is C.

Information Concerning Thompson Corporation's Product a Follows: Sales &Nbsp; &Nbsp; $300,000 \$ 300,000 $300,000

Information Concerning Thompson Corporation's Product a Follows:
Sales &Nbsp; &Nbsp; $\$ 300,000$