Tory Company sells a single product. Troy estimates demand and costs at various
ID: 2763539 • Letter: T
Question
Tory Company sells a single product. Troy 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
149,000
$45
$3,530,000
$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 Troy have if a price of $45 is charged?
Units Sold
Price
Total Variable Costs
Fixed Costs
120,000
$48
$3,000,000
$1,000,000
149,000
$45
$3,530,000
$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
Explanation / Answer
When the price is $45, the profits are calculated as follows:
Profit that Troy will make if a price of $45 is charged is $2,175,000
Units 149000 Sales price 45 Revenue 6705000 Varaible costs 3530000 Fixed cost 1000000 Profit 2175000