### Business Economics Problem**Question 8**Sugar Corp has a selling price of $26, variable costs of $16 per unit, and fixed costs of $24,000. Maple expects a profit of $306,000 at its anticipated level of production. If Sugar sells 5,500 units more than expected, how much higher will its profits be?**Answer Options:**- $56,000- $306,000- $145,600- $250,000**Explanation of Options:**This question involves calculating the change in profits based on selling additional units, given costs and selling price per unit. 1. **Fixed Costs**: - Remains constant at $24,000 regardless of the number of units sold.2. **Variable Costs**: - Increases with the number of units sold, at $16 per unit.3. **Selling Price**: - Each unit is sold at $26.4. **Expected Profit**: - Anticipated profit is $306,000 based on the original production number.**To Calculate Additional Profit**:1. Determine the contribution margin per unit: - Contribution Margin = Selling Price - Variable Cost - Contribution Margin = $26 - $16 = $10 per unit2. Calculate the additional profit from selling 5,500 extra units: - Additional Profit = Contribution Margin * Additional Units - Additional Profit = $10 * 5,500 = $55,000Choose the closest answer from the options provided, considering any rounding that might have occurred.

Unit contribution margin = Selling price per unit - Variable cost per unit = $26 - $16 = $10 per unit If sugar sell 5600 units more, higher profit will be = Higher nos of units *Unit contribution margin = 5600*$10 = $56,000 Hence first option is correct.

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Accounting

Saved 8 Sugar Corp has a seling price of $26, variable costs of $16 per unit, and fixed costs of $24,000. Maple expects profit of $306,000 at its antici level of production If Sugar sells 5,600 units more than expected, how much higher will its profits be? Mutiple Choice

Saved 8 Sugar Corp has a seling price of $26, variable costs of $16 per unit, and fixed costs of $24,000. Maple expects profit of $306,000 at its antici level of production If Sugar sells 5,600 units more than expected, how much higher will its profits be? Mutiple Choice

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

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