A Retail Chain Sells 100 Designer Sheet Sets for $199

question 96

Multiple Choice

A retail chain sells 100 designer sheet sets for $199.99 a set; these sheet sets cost the company $69.95 a set to buy. The company also sells 1,000 basic sheet sets for $49.99 a set; these sheet sets cost the company $24.99 to buy. Other operating expenses total $10,000. Which of the following statements is true?

• A) The company's net income is $38,004.
• B) Rounded to the nearest whole number, the gross profit percentage is 65% on the designer sheets and 50% on the basic sheets.
• C) The company's gross profit is $28,004.
• D) The total sales for the period are $48,004.

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Definitions:

AVC

Average Variable Cost refers to the variable costs (such as labor and materials) per unit of output produced.

MR Output

The output level where marginal revenue equals marginal cost, guiding firms in maximizing their profitability.

Price

The amount of money required to purchase a good, service, or asset.

AVC

Average Variable Cost represents the variable costs (like materials and labor) associated with producing each unit of output.