In the table scenario Company X manufactured 120,000 units during the year, which caused its inventory to increase 10,000 units. Suppose, instead, that the company had manufactured 150,000 units during the year, which is its production capacity. Assume sales and other factors were the same in this alternative scenario as shown in table - only production output is different. What would be its operating profit for the year if it had produced 150,000 units?
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Company X
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Per Unit
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Totals
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Operating Profit Report for Year
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Sales volume, in Units
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110,000
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Sales Revenue
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$1,400.00
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$154,000,000
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Cost of Goods Sold Expense (see below)
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-760
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-83,600,000
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Gross Margin
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$640.00
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$70,400,000
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Variable Operating Expenses
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-300
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-33,000,000
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Contribution Margin
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$340.00
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$37,400,000
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Fixed Operating Expenses
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-21,450,000
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Operating Profit
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$15,950,000
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Manufacturing Activity Summary for Year
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Per Unit
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Totals
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Annual Production Capacity, in Units
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150,000
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Actual Output, in Units
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120,000
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Raw Materials
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$215.00
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$25,800,000
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Direct Labor
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125
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15,000,000
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Variable Manufacturing Overhead Costs
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70
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8,400,000
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Total Variable Manufacturing Costs
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$410.00
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$49,200,000
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Fixed Manufacturing Overhead Costs
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350
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42,000,000
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Product Cost and Total Manufacturing Costs
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$760.00
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$91,200,000
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