The profit per bag for the bags sold at $1 each is 0.35
The correct option is: (D)
What is profit?
Profit is the positive financial gain remaining after all costs, taxes, and expenses have been deducted from total sales.
Profit per bag for the bags sold at $1 each be,
Profit = (Estimated sales -(Estimated Sales* Variable cots +Fixed cost))/Estimated Sales
We know,
Estimated sales= 1600000
Variable cost = 0.40
Fixed cost= 400000
So, Profit = [tex]\frac{1600000-(1600000*0.40+400000)}{1600000}[/tex]
= [tex]\frac{1600000-(1040000)}{1600000}[/tex]
= [tex]\frac{560000}{1600000}[/tex]
= 0.35
Hence, the profit per bag be 0.35.
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