ITPEC IP April 2020 Question 70
ITPEC IP April 2020 — Question 70 of 100
The new operating profit is 204,000 yen. The original unit price is 700,000÷700 = 1,000 yen and variable cost is 140,000÷700 = 200 yen. The new price is 800 yen and quantity is 840 units. Profit is 800×840 − 200×840 − 300,000 = 204,000 yen.
Answer (b)
Why not others:
- fixed cost remains 300,000 yen
- variable cost rises with quantity to 168,000 yen
- applying only the price decrease or only the quantity increase produces an incorrect total
Key rule: Recalculate revenue and total variable cost using the new quantity, then subtract unchanged fixed cost.
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