Ships Ahoy is a small company that makes model sailboat kits priced at $120 each.(There is no quantity discount.)The costs of the materials that go into each kit are $45.It costs $5 in labour to assemble a kit.The company has monthly expenses of $1,000 for rent and insurance,$200 for heat and electricity,$500 for advertising in sailing and hobby magazines,and $3,500 for the monthly salary of its owner.If Ships Ahoy sells 150 kits in a given month,its monthly profit will be:
A)$5,300.
B)$10,500.
C)$12,700.
D)$12,800.

Question

Quizplus · Accepted Answer

The total revenue from selling 150 kits is 150 * $120 = $18,000. The total variable cost is 150 * ($45 + $5) = $7,500. The total fixed costs are $1,000 + $200 + $500 + $3,500 = $5,200. Therefore, the profit is $18,000 - $7,500 - $5,200 = $5,300.

Ships Ahoy Is a Small Company That Makes Model Sailboat