Calculation of estimated profit

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Reference no: EM13827952

Terracotta Ltd - Newly introduced products under review

Coal Flyash - Coal flyash bricks are made from coal-burning waste. These bricks reduce raw material cost for Terracotta Ltd and reduce waste disposal costs for power plants. The bricks are designed to have better color, physical consistency, weight, compressive strength and thermal conductivity than standard bricks.

Colourbrix - Colourbrix has a range of new and vibrant colors. They do not need to be rendered or painted because the color is infused into the brick. Colourbrix pricing strategy:

Sales price per unit (1000 bricks) $5750

Expected variable costs per unit $3120

Fixed overhead costs to be allocated $2700,000

Estimated unit sales in the first year 4000 units

Desired profit margin 40 percent

What is the estimated profit if Terracotta Ltd achieves the sales target of 4000 units for Colourbrix in the first year?

A. $4976,000

B. $5903,000

C. $7820,000

D. $10520,000

Additional Requirement

This multiple choice question lies from Corporate Strategy and it discusses about the estimated profit that can be earned by selling 4000 units of bricks.

Reference no: EM13827952

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