Asked by jesus salazar on Jul 21, 2024
Verified
Lansbury Manufacturing produces hair brushes. The selling price is $20 per unit and the variable costs are $8 per brush. Fixed costs per month are $4800. If Lansbury sells 30 more units beyond breakeven how much does profit increase as a result?
A) $360
B) $600
C) $240
D) $1200
Variable Costs
Costs that vary directly with the level of production or output, such as raw materials and direct labor expenses.
Fixed Costs
Costs that remain constant regardless of the amount of production or sales, including rent, salaries, and insurance fees.
Breakeven
The point at which total costs and total revenue are equal, resulting in no net loss or gain, and everything earned beyond this point is considered profit.
- Analyze the impact of selling additional units beyond the break-even point on profit.
Verified Answer
EM
Elizabeth MattracionJul 24, 2024
Final Answer :
A
Explanation :
The profit per unit is the selling price minus the variable cost, which is $20 - $8 = $12. Selling 30 more units beyond the breakeven point increases profit by 30 units * $12/unit = $360.
Learning Objectives
- Analyze the impact of selling additional units beyond the break-even point on profit.