Suppose Carl's Candies sells 100 boxes of candy for $4 each. The total fixed cost of the 100...

Question:

Suppose Carl's Candies sells 100 boxes of candy for $4 each. The total fixed cost of the 100 boxes is $100, and the average variable cost of the 100 boxes is $1.50 per box. Carl's makes a total profit of:

a) $250

b) $2.50

c) $1.50

d) $150

Revenue and Costs:

A firm needs to know both its revenue and its costs to be able to determine the profit (or net income) earned. Costs are further divided into fixed and variable costs. Profit is the excess of revenue over costs. There is also the possibility of a loss if there isn't enough revenue to cover the costs, or a break-even if costs and revenues are equal.

Answer and Explanation: 1

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The answer is d)$150

Note that for Carl's Candies the total sales and variable costs associated with these 100 units can be calculated in the...

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What Is Gross Profit? - Definition, Formula & Calculation

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Chapter 9 / Lesson 7
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Understand the meaning of gross profit in accounting. Discover the formula for calculating gross profit and explore some examples of gross profit calculation.


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