ITPEC IP October 2022 Question 70
ITPEC IP October 2022 — Question 70 of 100
The new operating profit is 204,000 yen. Initially, the unit price is 700,000 ÷ 700 = 1,000 yen and variable cost per unit is 140,000 ÷ 700 = 200 yen. The new price is 1,000 × 0.8 = 800 yen, and quantity is 700 × 1.2 = 840. Thus sales are 800 × 840 = 672,000 yen and variable cost is 200 × 840 = 168,000 yen. Profit is 672,000 − 168,000 − 300,000 = 204,000 yen.
Answer (b)
Why not others:
- the other amounts do not reflect both the lower price and higher quantity
Key rule: Recalculate sales and variable cost using the new quantity, while fixed cost remains unchanged.
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