Answer:
a. profits are reduced by $4,000
Explanation:
Calculation to determine How would the daily profit be affected if the daily volume of sales drop by 10%
First step is to calculate the Variable cost per unit
Variable cost per unit = $10,000 / 50
Variable cost per unit = $200
Second step is to calculate the Profit for 50 bottles
Profit for 50 bottles = ($1,000 × 50) - ($30,000 + $10,000)
Profit for 50 bottles = $10,000
Third step is to calculate the Sales after 10% drop
Sales after 10% drop = 50 × (1 - 0.10)
Sales after 10% drop= 45
Fourth step is to calculate the Profit for 45 bottles
Profit for 45 bottles = ($1,000 × 45) - ($30,000 + (45 × 200))
Profit for 45 bottles= $6,000
Now let determine the Change in profit
Change in profit = $10,000 - $6,000
Change in profit= $4,000
Therefore How would the daily profit be affected if the daily volume of sales drop by 10% is that the PROFITS ARE REDUCED BY $4,000
