A company has monthly fixed costs of $96,000. The variable costs are $8.00 per unit. If the sales price of a unit is $14.00 and we sell $8000 units, the total sales revenue will be
A)$48.
B)$96,000.
C)$112,000.
D)$95,950.

Question

Quizplus · Accepted Answer

The total variable cost can be calculated as: 
Variable cost per unit x Number of units = $8.00 x 8000 = $64,000

The total cost (fixed + variable) can be calculated as:
Total cost = Fixed cost + Variable cost
Total cost = $96,000 + $64,000 = $160,000

The total sales revenue can be calculated as:
Sales price per unit x Number of units = $14.00 x 8000 = $112,000

Since the sales revenue ($112,000) is greater than the total cost ($160,000), the company will earn a profit. Therefore, the best choice is C.

A Company Has Monthly Fixed Costs of $96,000