The financial information of the company is as follows:Sales units: 490Price per unit: $30Fixed cost: $400Variable cost per unit: $20You have generated a scenario summary report for your Excel model, which includes the following two scenarios:Best case scenario: variable cost = $10, unit price = $40Worst case scenario: variable cost = $30, unit price = $20What is the profit obtained in best case scenario?Options :$9800$15200$12500$14300
Question
The financial information of the company is as follows:Sales units: 490Price per unit: 400Variable cost per unit: 10, unit price = 30, unit price = 980012500$14300
Solution
To calculate the profit in the best case scenario, we need to use the formula:
Profit = Total Revenue - Total Cost
Where: Total Revenue = Sales units * Price per unit Total Cost = Fixed cost + (Variable cost per unit * Sales units)
Given in the best case scenario: Variable cost per unit = 40
We can substitute these values into the formula:
Total Revenue = 490 units * 19600 Total Cost = 10/unit * 490 units) = 4900 = $5300
So, the profit in the best case scenario is:
Profit = 5300 = $14300
Therefore, the correct option is $14300.
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