Kerns pen company

Question

The Kerns Pen Company makes ballpoint pens. The fixed costs of operation for one month average $53,500. The cost of producing one pen is $0.75, and the pens are marketed to retailers for $1.05 each. Give the net profit or loss if the company manufactures 200,000 pens in a month.

Answer 1

net profit from sales of pens = 200,000 x $1.05 = $210,000.00

production costs of pens =200,000 x $0.75 = $150,000.00

 

Profit or loss:

 $210,000.00 - $150,000.00 - $53,500.00 = $6,500.00

 

the company has a profit of $6,500.00 per month