the fixed costs incurred by a small genetics research lab ar

the fixed costs incurred by a small genetics research lab are $200,000 per year. Variable costs are 60% of the annual revenue. If annual revenue is $300,000, the annual profit/loss is most nearly which of the below?

a. $66,000 profit

b. $66,000 loss

c. $80,000 profit

d. $80,000 loss

SUBJECT: introduction to system Engineering

Solution

The fixed cost of the research lab is $200000 per year. And the variable costs come around 60% of the revenue.

We have ther revenue as $300000. That is variables cost = 0.6 x 300000 = $180000

Hence the total cost of the lab = Fixed cost + variable costs

or, Total cost = $200000 + $180000 = $380000

Also the revenue is $300000. Therfore, we have a loss of $80000

Option D.