David W. answered • 06/14/19

Experienced Prof

The question wording gives clues on how to solve this: "determine the **annual** profit or loss"

What is the **annual **fixed cost? 12*(monthly cost) = $1200 per year

How many clocks sold **annually**? 12*(30 per month average) = 360 clocks per year

What is the **annual **variable cost for 360 clocks? $75*360 = $27,000

Those are all the costs. Now, what dollar sales? $125*360 = $45,000

**Profit = Income - Costs**

**Profit** = $45,000 - $1200 - $27,000 = **$16,800 per year,**

** (note: A negative profit would mean 'loss').**