Exhibit 5-7
Last month,Ellison Industries sold its product for $100 per unit.Fixed production costs were $50,000,and variable production costs amounted to $21 per unit.Fixed selling and administrative costs totaled $20,000,and variable selling and administrative costs amount to $3.00 per unit.Dawson produced and sold 6,000 units last month.
-Refer to Exhibit 5-7.Which of the following amounts represents total operating profit?

Question

Quizplus · Accepted Answer

Total revenue = $100 x 6,000 units = $600,000
Total variable production costs = $21 x 6,000 units = $126,000
Total fixed production costs = $50,000
Total variable selling and administrative costs = $3 x 6,000 units = $18,000
Total fixed selling and administrative costs = $20,000

Total operating expenses = $126,000 + $50,000 + $18,000 + $20,000 = $214,000

Total operating profit = Total revenue - Total operating expenses
= $600,000 - $214,000 = $386,000

Therefore, the correct answer is C) $386,000.

Exhibit 5-7 Last Month,Ellison Industries Sold Its Product for $100 Per Unit.Fixed