00:01
All right, so here's the issue with this question.
00:04
The amount of information i have here, it says that i have the selling price and the cost, which means i make $6 profit, and i also have a cost per month of $22 ,000.
00:14
This company has a capacity to manufacture 100 ,000 boxes, but that's per year, per year.
00:22
So if we're going to determine a net income at a volume of 30 % capacity, is that 30 % capacity, annual capacity? is that an annual net income or a monthly net income, it doesn't describe that in the question.
00:42
If you want to look at net income at a volume of 30 % capacity on an annual basis, well, you'd have to look at selling 30 % of $100 ,000, which is $30 ,000 boxes, and you make $6 a box on that.
00:59
So the net income, just by boxes, and selling price and variable cost is $180 ,000.
01:08
But if you factor into the fixed costs per month of $22 ,000, well, $22 ,000 times 12 months is $264 ,000.
01:23
So if this is an annual comparison, you don't make any money.
01:30
There is no net income.
01:33
You have a gross income, but there's no net income...