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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: 30Fixedcost:30Fixed cost: 400Variable cost per unit: 20YouhavegeneratedascenariosummaryreportforyourExcelmodel,whichincludesthefollowingtwoscenarios:Bestcasescenario:variablecost=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 = 40Worstcasescenario:variablecost=40Worst case scenario: variable cost = 30, unit price = 20Whatistheprofitobtainedinbestcasescenario?Options:20What is the profit obtained in best case scenario?Options :9800152001520012500$14300

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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 = 10Priceperunit=10 Price per unit = 40

We can substitute these values into the formula:

Total Revenue = 490 units * 40/unit=40/unit = 19600 Total Cost = 400+(400 + (10/unit * 490 units) = 400+400 + 4900 = $5300

So, the profit in the best case scenario is:

Profit = 1960019600 - 5300 = $14300

Therefore, the correct option is $14300.

This problem has been solved

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