JT Inc. produces gourmet frozen dinners for the airline industry. JT has fixed costs of $200,000 and variable costs of $8 per frozen dinner. The selling price per frozen dinner is $13 and JT plans to sell 150,000 frozen dinners this year. If JT sells the 150,000 frozen dinners they planned to sell what will JT's operating profit be this year?

Question

Business

Cade Hawkins

16 June, 20:12

JT Inc. produces gourmet frozen dinners for the airline industry. JT has fixed costs of $200,000 and variable costs of $8 per frozen dinner. The selling price per frozen dinner is $13 and JT plans to sell 150,000 frozen dinners this year. If JT sells the 150,000 frozen dinners they planned to sell what will JT's operating profit be this year?

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Answers (1)

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Haylie Ochoa · Answer 1

The operating profit for this year amounts to $ 550,000

Explanation:

Operating Profit is computed below as:

Operating Profit = Revenue - Expense (Fixed Cost + Variable Cost)

= $1,950,000 - ($200,000 + $1,200,000)

= $1,950,000 - $1,400,000

= $550,000

Revenue = Number of frozen dinners * Selling Price

= 150,000 * $13

= $1,950,000

Variable Cost = Number of frozen dinners * Cost per frozen dinner

= 150,000 * $8

= $1,200,000