Iguana Company sells a single product. Iguana estimates demand and costs at vari
ID: 2353595 • Letter: I
Question
Iguana Company sells a single product. Iguana estimates demand and costs at various activity levels as follows:Units Sold Price Total Variable Costs Fixed Costs
120,000 $48 $3,000,000 $1,000,000
140,000 $45 $3,500,000 $1,000,000
160,000 $40 $4,000,000 $1,000,000
180,000 $35 $4,500,000 $1,000,000
200,000 $30 $5,000,000 $1,000,000
How much profit will Iguana have if a price of $45 is charged?
A.) $20
B.) $1,800,000
C.) $0
D.) $6,300,000
E.) $2,800,000
Please show work so I can see what I did wrong. Thanks for your help!
Explanation / Answer
the pric echarged =45$ the units sold at 45 $ =140000 cost of goods sold= revenue =140000*45=6300000$ total variable costs =3500000$ fixed costs=100000$ hence total costs =4500000$ profit=6300000-4500000 =1800000$ so the ans is B cheers :)