A furniture firm produces 5 sofas each week - Leaving Cert Economics - Question 6 - 2013
Question 6
A furniture firm produces 5 sofas each week. It receives €1,500 in total from the sale of these five sofas. The firm pays the following production costs for the five... show full transcript
Worked Solution & Example Answer:A furniture firm produces 5 sofas each week - Leaving Cert Economics - Question 6 - 2013
Step 1
Write, in the spaces below, which two are fixed costs and which two are variable costs.
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Answer
Fixed Costs:
Insurance on Premises
Rent of Premises
Variable Costs:
Raw Materials
Wages
Step 2
Calculate the total cost of producing all 5 sofas:
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Answer
To calculate the total cost of producing the sofas, we sum the costs:
Raw Materials: €400
Insurance on Premises: €100
Wages: €500
Rent of Premises: €300
Total Cost = €400 + €100 + €500 + €300 = €1,300
Step 3
Calculate the profit made on total sales:
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Answer
To find the profit, we subtract the total cost from the total revenue:
Total Revenue = €1,500
Total Cost = €1,300
Profit = Total Revenue - Total Cost = €1,500 - €1,300 = €200
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