A foreign company whose sales will not affect markson's market offers to buy 2,000 units at $15.35 per unit. in addition to variable manufacturing costs, selling these units would increase fixed overhead by $1,690 for the purchase of special tools. if markson accepts this additional business, its profits will:

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Business

Isai Barnett

12 December, 10:02

A foreign company whose sales will not affect markson's market offers to buy 2,000 units at $15.35 per unit. in addition to variable manufacturing costs, selling these units would increase fixed overhead by $1,690 for the purchase of special tools. if markson accepts this additional business, its profits will:

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Jade · Answer 1

In businesses involving manufacturing companies, they conduct economic analysis on their capital costs and profit. By doing this, they would have an outlook on their breakeven time when they could recover all their initial capital costs.

Net profit is equal to the amount of money of sales minus the variable and fixed costs. These costs include equipment and installation costs, maintenance costs, cost of acquiring the raw data and all the other costs incurred just to produce the final product. Therefore, the net profit is equal to

Net profit = (Price per unit*Number of Units) - (Variable + Fixed Costs)

Net Profit = ($15.35*2000) - $1,690

Net Profit = $305,310