Freire Corp. produced 200,000 units this year, at a variable cost of $3 per unit. Its fixed costs are $120,000 per year. It sold all 200,000 units produced at $5 per unit. Its profits for the year were
A) Zero
B) 280000
C) 400000
D) 880000

Question

Quizplus · Accepted Answer

The profit is calculated by subtracting total costs from total revenue. Total revenue is $5 per unit * 200,000 units = $1,000,000. Total costs include variable costs ($3 per unit * 200,000 units = $600,000) and fixed costs ($120,000), totaling $720,000. Therefore, profit = $1,000,000 - $720,000 = $280,000.