In 2013, Sunny Electronics expects to sell 100,000 3-D television sets for an average price of $1000.Expected production costs are $600 per unit.In 2014, volume is expected to increase by 10%, inflation will increase the cost per unit by 3%, but to attract more buyers, Sunny will reduce the price to $950.In nominal dollars, expected gross profit for 2014 is [blank].
A)$45.32 million
B)$40 million
C)$38 million
D)$36.52 million

Question

Quizplus · Accepted Answer

In 2014, the expected sales volume is 110,000 units (10% increase from 100,000). The cost per unit will be $618 (3% increase from $600). The selling price will be $950. Gross profit per unit = $950 - $618 = $332. Total gross profit = 110,000 units * $332 = $36.52 million.

In 2013, Sunny Electronics Expects to Sell 100,000 3-D Television