Answer :
Answer:
The total profit on units sold is A) $6,034.60
Explanation:
The formula for calculating profit is total revenue - total cost, so here also for calculating the profit on units sold we have to do the same thing. We will calculate the revenue and cost separately here, but one thing to note here is that in the total cost of goods sold and advertising and set up expenses, cost of those units are also included which were not sold.
So the first step would be to calculate the cost of unsold stock -
Cost of unsold stock = number of units not sold x price per unit
= 8 x 130
= $1040
adding proportionate expenses on unsold stock here = 300 / 50 x 8
= $48
Therefore the total cost of unsold stock = $1088
REVENUE =
Sales = number of units x price per unit
= 42 x $315
= $13230
COST =
Cost of goods sent on consignment = number of units x price per unit
= 50 x $130
= $6500
ADDING Freight charges = $300
LESS unsold stock = $1088
ADD advertising expenses = $250
ADD set up cost = $175
ADD commission = $13230 x 8% = $1058.4 ( calculated on sales )
TOTAL COST = $7195.4
profit = revenue - cost
= $13230 - $7195.4
= $6034.6