Southwest U's campus book store sells course packs for $16 each,the variable cost per pack is $9,fixed costs to produce the packs are $200,000,and expected annual sales are 63,000 packs.What are the pre-tax profits from sales of course packs?
A) $281,970
B) $241,000
C) $216,900
D) $204,850
E) $219,310

Question

Quizplus · Accepted Answer

The pre-tax profit is calculated by subtracting total costs (fixed and variable) from total revenue. Total revenue is 63,000 packs * $16 = $1,008,000. Total variable cost is 63,000 packs * $9 = $567,000. Total cost is $567,000 (variable) + $200,000 (fixed) = $767,000. Pre-tax profit is $1,008,000 - $767,000 = $241,000.

Southwest U's Campus Book Store Sells Course Packs for $16