Parker Industries is a small company with a big name! Parker Industries is actually a one-person company that imports strands of LED lights from China and sells them through its website. Parker's only overhead is a storage unit for inventory that costs $125 a month and a $25 monthly fee for website hosting. Currently, Parker imports the lights for $.99 each (including inbound shipping) and sells them for $4.49. Parker also pays shipping expenses of $.50 per light strand. If Parker is currently selling 50 units a month, what is Parker's monthly profit or loss?
A) $0
B) $224.50 (profit)
C) $49.50 (profit)
D) −$74.50 (loss)

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Answer:

A

Explanation:

Profit = total cost - total revenue

total cost = fixed cost +variable cost

fixed cos =125 + 25 = 150

variable cost = 50 x (0.99 + 0.50) = 74.50

profit-earning distributed to the owner as a result of a profitable market production process. Profit is a metric of profitability, and it is the primary concern of the owner in the earnings context of market production. Several profit measurements are often used.

The correct option for Parker's monthly profit or loss A. 0

Profit = total cost - total revenue

Total cost = fixed cost +variable cost

Fixed cost = [tex]\text{cost of the stock} + \text{monthly charges of the stock}[/tex]

Fixed cost =125 + 25 = 150

Variable cost = [tex]\text{No. of units}\times (\text{import charges} + \text{shipping charges})[/tex]

Variable cost = [tex]50 \times (0.99 + 0.50)[/tex]= 74.50

Total cost = fixed cost +variable cost

Total cost = 150 + 74.50

Total revenue =  [tex]\text{selling price}\times \text{no. of units}[/tex]

Total revenue =  [tex]4.49 \times 50[/tex] = 224.50

Profit = total cost - total revenue

profit = 224.50 - 224.50 = 0

To know more about the calculation of the profit, refer to the link below:

https://brainly.com/question/25173974