Southwest U's campus book store sells course packs for $15 each,the variable cost per pack is $9,fixed costs to produce the packs are $200,000,and expected annual sales are 50,000 packs.What are the pre-tax profits from sales of course packs?
A)$ 72,900
B)$ 81,000
C)$ 90,000
D)$100,000
E)$110,000

Question

Quizplus · Accepted Answer

The pre-tax profit is calculated by subtracting total costs from total revenue. Total revenue is $15 * 50,000 = $750,000. Total costs include fixed costs of $200,000 and variable costs of $9 * 50,000 = $450,000. Therefore, total costs are $200,000 + $450,000 = $650,000. The pre-tax profit is $750,000 - $650,000 = $100,000.

Southwest U's Campus Book Store Sells Course Packs for $15