Question
A company's current profit is $25,000 for a product that sells for $100 and has a unit contribution margin of $65. Fixed costs are $40,000. If the company increases sales by 50 units, total profit will increase by $ [blank]. (Enter your answer as a whole number.)
Answers
GPT-4o mini
To determine how much total profit will increase if the company increases sales by 50 units, we can use the unit contribution margin.
The unit contribution margin is given as $65. This means that for every unit sold, the company contributes $65 toward covering fixed costs and generating profit.
If the company sells an additional 50 units, the increase in profit can be calculated by multiplying the additional units sold by the unit contribution margin:
\[
\text{Increase in Profit} = \text{Units Sold} \times \text{Unit Contribution Margin}
\]
\[
\text{Increase in Profit} = 50 \, \text{units} \times 65 \, \text{dollars/unit} = 3250 \, \text{dollars}
\]
Therefore, if the company increases sales by 50 units, total profit will increase by \(\boxed{3250}\).
The unit contribution margin is given as $65. This means that for every unit sold, the company contributes $65 toward covering fixed costs and generating profit.
If the company sells an additional 50 units, the increase in profit can be calculated by multiplying the additional units sold by the unit contribution margin:
\[
\text{Increase in Profit} = \text{Units Sold} \times \text{Unit Contribution Margin}
\]
\[
\text{Increase in Profit} = 50 \, \text{units} \times 65 \, \text{dollars/unit} = 3250 \, \text{dollars}
\]
Therefore, if the company increases sales by 50 units, total profit will increase by \(\boxed{3250}\).