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Homework answers / question archive / Nib Chocolet Company produces 100,000 chocolet bars which sell for 4 ETB a bar
Nib Chocolet Company produces 100,000 chocolet bars which sell for 4 ETB a bar. If variable costs are 3ETB per bar, and it has 150,000ETB fixed operating costs, in the short run, it should
Given,
Number of Chocolate Bars Produced = 100,000
Sales price per Bar = 4 ETB
Variable Cost per Bar = 3 ETB
Fixed Operating Cost = 150,000 ETB
Profit = Sales - Variable Cost - Fixed Operating Cost
= (100,000*4 ETB) - (100,000*3 ETB) - 150,000 ETB
= 400,000 ETB - 300,000 ETB - 150,000 ETB
Profit = -50,000 ETB
As, there is loss of 50,000 ETB still it should keep producing as variable cost are being met.