Grove Audio is considering the introduction of a new model of wireless speakers with the following price and cost characteristics.

Sales price	$ 450.00	per unit
Variable costs	210.00	per unit
Fixed costs	764,000	per year
Assume that the projected number of units sold for the year is 4,750. Consider requirements (b), (c), and (d) independently of each other.

Required:
What will the operating profit be?

To find the operating profit, we need to calculate the total revenue, total variable costs, and total fixed costs, then determine the difference between total revenue and total costs.

**Given:**

- Sales price per unit: $ \$450 $
- Variable cost per unit: $ \$210 $
- Fixed costs per year: $ \$764,000 $
- Projected number of units sold: $ 4,750 $

**Step-by-step Calculation:**

1. **Total Revenue:**
   \[
   \text{Total Revenue} = \text{Sales price per unit} \times \text{Number of units sold}
   \]
   \[
   \text{Total Revenue} = 450 \times 4750
   \]

2. **Total Variable Costs:**
   \[
   \text{Total Variable Costs} = \text{Variable cost per unit} \times \text{Number of units sold}
   \]
   \[
   \text{Total Variable Costs} = 210 \times 4750
   \]

3. **Total Costs:**
   \[
   \text{Total Costs} = \text{Total Variable Costs} + \text{Fixed Costs}
   \]

4. **Operating Profit:**
   \[
   \text{Operating Profit} = \text{Total Revenue} - \text{Total Costs}
   \]

Let's calculate these values.The operating profit for Grove Audio will be **$376,000**.

Would you like more details or have any questions? Here are some related questions to consider:

1. What is the break-even point in units for this product?
2. How does the operating profit change if the sales volume increases by 10%?
3. What is the contribution margin per unit?
4. How would a decrease in the sales price to $400 per unit affect the operating profit?
5. What is the impact on the operating profit if fixed costs increase by 5%?

**Tip:** Understanding the contribution margin is crucial for analyzing how changes in sales volume impact profit.

Grove Audio is considering the introduction of a new model of wireless speakers with the following price and cost characteristics.

Sales price: $450.00 per unit
Variable costs: $210.00 per unit
Fixed costs: $764,000 per year
Assume that the projected number of units sold for the year is 4,750. Consider requirements (b), (c), and (d) independently of each other.

Required: What will the operating profit be?

Learn how to calculate the operating profit for Grove Audio's new wireless speakers. Using key business concepts, this problem includes step-by-step calculations involving sales price, variable costs, and fixed costs. Find out the total operating profit based on a projected 4,750 units sold.

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