Product engineers and marketers estimate that the variable cost of manufacturing a new "genie" will be $55 per unit. The selling price is to be $130. The fixed costs applicable are $1,240,000 per year and the capacity per year is 60,000 units. Calculate the maximum net profit.
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To achieve the maximum profit (also called net income), the business will operate at full capacity. The selling price is measured against the fixed and variable costs where `CP= $1240000 + ($55 times 60000)= 4540000` and`SP=$130 times 60 000= 7800000`
`= $3 260 000`
The maximum net profit is $3 260 000
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