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
Fixed Costs.
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Insurance on Premises
Rent of Premises
Step 2
Variable Costs.
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Raw Materials
Wages
Step 3
(i) The total cost of producing all 5 sofas:
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Answer
To calculate the total cost, we add all production costs together:
Total Cost = Raw Materials + Insurance + Wages + Rent
Substituting the values:
Total Cost = €400 + €100 + €500 + €300 = €1300
Step 4
(ii) The profit made on total sales:
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Answer
Profit = Total Sales - Total Cost
Total Sales = €1,500
Total Cost = €1,300
So,
Profit = €1,500 - €1,300 = €200
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