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A company is analyzing its potential profit based on different pricing strategies. The current price is $50 per unit, and the company wants to see how changing the price affects its profit. The fixed costs are $5000, and variable costs per unit are $20. If the company sells 200 units at the current price, what would be the profit if the price is increased to $60 per unit? Create a data table for the same.Options :$2000$3000$4000$5000

Question

A company is analyzing its potential profit based on different pricing strategies. The current price is 50perunit,andthecompanywantstoseehowchangingthepriceaffectsitsprofit.Thefixedcostsare50 per unit, and the company wants to see how changing the price affects its profit. The fixed costs are 5000, and variable costs per unit are 20.Ifthecompanysells200unitsatthecurrentprice,whatwouldbetheprofitifthepriceisincreasedto20. If the company sells 200 units at the current price, what would be the profit if the price is increased to 60 per unit? Create a data table for the same.Options :200020003000400040005000

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Solution

To calculate the profit, we first need to understand the formula for profit. The formula for profit is:

Profit = Total Revenue - Total Cost

Where:

  • Total Revenue = Price per unit * Quantity sold
  • Total Cost = Fixed Costs + Variable Costs

Variable Costs = Variable cost per unit * Quantity sold

Given in the problem:

  • Price per unit = $60
  • Quantity sold = 200 units
  • Fixed Costs = $5000
  • Variable cost per unit = $20

Let's calculate:

Step 1: Calculate Total Revenue Total Revenue = Price per unit * Quantity sold = 60∗200=60 * 200 = 12000

Step 2: Calculate Variable Costs Variable Costs = Variable cost per unit * Quantity sold = 20∗200=20 * 200 = 4000

Step 3: Calculate Total Cost Total Cost = Fixed Costs + Variable Costs = 5000+5000 + 4000 = $9000

Step 4: Calculate Profit Profit = Total Revenue - Total Cost = 12000−12000 - 9000 = $3000

So, if the company sells 200 units at a price of 60perunit,theprofitwouldbe60 per unit, the profit would be 3000.

Data Table:

Price per unit Quantity sold Total Revenue Variable Costs Total Cost Profit
$60 200 $12000 $4000 $9000 $3000

This problem has been solved

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