##### What would the operating profit or loss associated with production?

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The Poseidon Swim company produces swim trunks. The average selling price for one of their swim trunks is \$61.55. The variable cost per unit is \$19.99, Poseidon swim has average fixed cost per year of \$17,351.

What would the operating profit or loss associated with the production and sale of 480 swim trunks?

Oct 3rd, 2015

Poseidon Swim Company

Income Statement

For the year_______________

Sale (\$61.55 *480 units)                                                                           \$29,544.00

Less cost of goods sold:

Variable cost (\$19.99*480 units)                                          \$9,595.2

Fixed cost per year                                                              17,351.0      26,946.20

Operating profit for the year                                                                       \$ 2,597.80

Oct 3rd, 2015

did you subtract the \$29,544 - \$9,595.2 to get \$26,946.20? How did you end up with \$2,597.80?

Oct 3rd, 2015

I added variable cost \$9,595.20 + \$17,351.00 fixed cost is equal to \$26,946.20 total production cost.

Variable cost  (\$19.99 480 units)                  \$9,595.20

Add Fixed cost for the year                           17,351.00

Total production cost                                   \$26,946.20

Total sale value (\$61.55*480)                     \$29,544.00

Less total cost of production                         26,946.20

Operating profit from 480 units                    \$ 2,597.80

Oct 3rd, 2015

I added variable cost \$9,595.20 + \$17,351.00 fixed cost is equal to \$26,946.20 total production cost.

Variable cost  (\$19.99 480 units)                  \$9,595.20

Add Fixed cost for the year                           17,351.00

Total production cost                                   \$26,946.20

Total sale value (\$61.55*480)                     \$29,544.00

Less total cost of production                         26,946.20

Operating profit from 480 units                    \$ 2,597.80

Oct 3rd, 2015

Awesome, thank you!

Oct 3rd, 2015

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Oct 3rd, 2015
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Oct 3rd, 2015
Oct 17th, 2017
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