Southwest U's campus book store sells course packs for $18 each, the variable cost per pack is $8, fixed costs to produce the packs are $200,000, and expected annual sales are 51,000 packs. What are the pre-tax profits from sales of course packs? $285,200 $310,000 $306,900 $248,000 $372,000

The correct answer is B.

Explanation:

Giving the following information:

Southwest U's campus book store sells course packs for $18 each, the variable cost per pack is $8, fixed costs to produce the packs are $200,000, and expected annual sales are 51,000 packs.

To calculate the profit we have to use the following structure:

Sales = 18*51,000 = 918,000

Variable cost = 8*51,000 = (408,000)

Contribution margin = 510,000

Fixed costs = (200,000)

Net operating income = 310,000