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A jeans maker is designing a new line of jeans. These jeans will sell for $410 per unit and cost $328 per unit in variable costs to make. Fixed costs total $120,000. If 5,000 units are produced and sold, income equals:Multiple Choice$2,050,000.$1,930,000.$290,000.$410,000.$1,520,000.

Question

A jeans maker is designing a new line of jeans. These jeans will sell for 410perunitandcost410 per unit and cost 328 per unit in variable costs to make. Fixed costs total 120,000.If5,000unitsareproducedandsold,incomeequals:MultipleChoice120,000. If 5,000 units are produced and sold, income equals:Multiple Choice2,050,000.1,930,000.1,930,000.290,000.410,000.410,000.1,520,000.

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Solution

To solve this problem, we need to calculate the total income and the total cost, and then subtract the total cost from the total income.

Step 1: Calculate the total income The total income is the selling price per unit times the number of units sold. Total income = 4105000=410 * 5000 = 2,050,000

Step 2: Calculate the total variable cost The total variable cost is the variable cost per unit times the number of units produced. Total variable cost = 3285000=328 * 5000 = 1,640,000

Step 3: Calculate the total cost The total cost is the sum of the total variable cost and the fixed cost. Total cost = 1,640,000+1,640,000 + 120,000 = $1,760,000

Step 4: Calculate the income The income is the total income minus the total cost. Income = 2,050,0002,050,000 - 1,760,000 = $290,000

So, the income equals $290,000.

This problem has been solved

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