Question

The ABC Company can purchase smartphones from a local factory for 30$. Its other variable costs are 125 per unit. The local factory allows ABC Company to return all the unsold units and get a total refund of 305 per unit. The selling price of the smartphones is 80$ and the total fixed costs are equal to 75.0005 a. Calculate the revenues if 2.000 units are sold. b. Calculate the total variable costs, the profit and the Break Even Point Please provide the full calculations

Answer 1

a)

Selling price per unit = $80

Number of units sold = 2,000

Total revenue = Number of units sold x Selling price per unit

= 2,000 x 80

= $160,000

b)

Purchase price per unit = $30

Other variable cost per unit = $12

Total variable cost per unit = Purchase price per unit + Other variable cost per unit

= 30 + 12

= $42

Total variable cost = Total variable cost per unit x Number of units sold

= 42 x 2,000

= $84,000

Profit = Total revenue - Total variable cost - Total fixed cost

= 160,000 - 84,000 - 75,000

= $1,000

Contribution margin per unit = Selling price per unit – Variable cost per unit

= 80 - 42

= $38

Break even point (units) = Fixed cost/Contribution margin per unit

= 75,000/38

= 1,974 units (rounded to whole units)

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