Use the following to answer the questions below.
Luvmatics plans to produce a new product.Three different models are planned: the Regular,Large,and Jumbo.The fixed costs depend on which of two locations are used;in San Francisco the fixed costs would be $2.5 million per year,but in Tuttle the fixed costs would be $1.2 million.Sale prices and variable costs for the three models are shown in the table. Table A.1
-Use the information in Table A.1.How much does Luvmatics make for each Jumbo unit that is produced in Tuttle and sold at the listed price?
A)$68
B)$58
C)$34
D)This cannot be determined without any information on the production volume.

Question

Use the following to answer the questions below.
Luvmatics plans to produce a new product.Three different models are planned: the Regular,Large,and Jumbo.The fixed costs depend on which of two locations are used;in San Francisco the fixed costs would be $2.5 million per year,but in Tuttle the fixed costs would be $1.2 million.Sale prices and variable costs for the three models are shown in the table.  Table A.1
-Use the information in Table A.1.How much does Luvmatics make for each Jumbo unit that is produced in Tuttle and sold at the listed price?
A)$68 
B)$58 
C)$34 
D)This cannot be determined without any information on the production volume.

Quizplus · Accepted Answer

To find the profit per unit for the Jumbo model in Tuttle, we need to calculate the difference between the sale price and variable cost.

Profit per unit for Jumbo model = Sale price - Variable cost

= $98 - $40

= $58

Therefore, Luvmatics makes $58 for each Jumbo unit that is produced in Tuttle and sold at the listed price.

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