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24 July, 08:38

Southwest U's campus book store sells course packs for $18 each, the variable cost per pack is $8, fixed costs to produce the packs are $200,000, and expected annual sales are 51,000 packs. What are the pre-tax profits from sales of course packs? $285,200 $310,000 $306,900 $248,000 $372,000

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  1. 24 July, 12:16
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    The correct answer is B.

    Explanation:

    Giving the following information:

    Southwest U's campus book store sells course packs for $18 each, the variable cost per pack is $8, fixed costs to produce the packs are $200,000, and expected annual sales are 51,000 packs.

    To calculate the profit we have to use the following structure:

    Sales = 18*51,000 = 918,000

    Variable cost = 8*51,000 = (408,000)

    Contribution margin = 510,000

    Fixed costs = (200,000)

    Net operating income = 310,000
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