Price Corp

question 48

Multiple Choice

Price Corp. is considering selling to a group of new customers and creating new annual sales of $90,000. Five percent will be uncollectible. The collection cost on these accounts is 3% of new sales, the cost of producing and selling is 80% of sales, and the firm is in the 30% tax bracket. What is the profit on new sales?

• A)$7,560
• B)$9,660
• C)$7,245
• D)None of the options

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Definitions:

Average Total Cost

The total cost of production divided by the quantity of output produced, representing the cost per unit of output.

Profit

The financial gain made in a transaction or the operation of a business after subtracting all expenses.

Harvest

The process of gathering mature crops from the fields.

Revenue

The total amount of money received by a company or government from its activities, such as sales of goods and services, before any expenses are subtracted.