A manufacturing company leases a building for ​$100 comma 000 per year for its manufacturing facilities. In​ addition, the machinery in this building is being paid for in installments of ​$20 comma 000 per year. Each unit of the product produced costs ​$15 in labor and ​$10 in materials. The product can be sold for ​$40. Assume that the demand is 10 comma 000 units per year.

Let’s break down the situation with the provided details to determine the company’s costs, revenue, and profit.

### Given Information:
- **Lease cost for the building**: $100,000 per year
- **Installments for machinery**: $20,000 per year
- **Labor cost per unit**: $15
- **Material cost per unit**: $10
- **Selling price per unit**: $40
- **Demand**: 10,000 units per year

### 1. **Fixed Costs**:
Fixed costs are those that do not vary with the number of units produced. The fixed costs include:
- Lease cost of the building: $100,000
- Machinery payments: $20,000

Thus, total fixed costs (FC) = $100,000 + $20,000 = **$120,000 per year**.

### 2. **Variable Costs**:
Variable costs depend on the number of units produced. These include:
- Labor cost per unit: $15
- Material cost per unit: $10

Total variable cost (VC) per unit = $15 + $10 = **$25 per unit**.

### 3. **Revenue**:
The company earns $40 per unit of product sold, and they sell 10,000 units per year.

Total revenue = Price per unit × Quantity sold = $40 × 10,000 = **$400,000 per year**.

### 4. **Total Variable Costs**:
Total variable costs for 10,000 units:

Total variable costs = Variable cost per unit × Number of units produced = $25 × 10,000 = **$250,000 per year**.

### 5. **Total Costs**:
Total costs include both fixed and variable costs.

Total costs = Fixed costs + Total variable costs = $120,000 + $250,000 = **$370,000 per year**.

### 6. **Profit**:
Profit is the difference between revenue and total costs.

Profit = Total revenue - Total costs = $400,000 - $370,000 = **$30,000 per year**.

### Conclusion:
The company makes a profit of **$30,000 per year** under these conditions.

Would you like to explore more details or ask any other questions?

Here are 5 related questions for further understanding:
1. How would a change in demand (e.g., 15,000 units) affect the company's profit?
2. What would happen to profit if the material cost per unit increased to $12?
3. How would different leasing costs affect total costs and profit?
4. What is the break-even point for this company in terms of units sold?
5. How much profit would the company make if they could increase the selling price by $5 per unit?

**Tip**: Keep an eye on variable costs when scaling production, as they directly affect profitability.

A manufacturing company leases a building for ​$100,000 per year for its manufacturing facilities. In​ addition, the machinery in this building is being paid for in installments of ​$20,000 per year. Each unit of the product produced costs ​$15 in labor and ​$10 in materials. The product can be sold for ​$40. Assume that the demand is 10,000 units per year.

Analyze the cost and profit of a manufacturing company leasing a building for $100,000 per year, with machinery paid in installments of $20,000 per year. Learn how to calculate fixed and variable costs, revenue, and profit based on a production of 10,000 units sold at $40 per unit. Suitable for Grades 10-12 students.

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