6. The \( O \) \& \( O \) Manufacturing Company believes they can sell 5,000 steel buildings for \( \$ 1,500 \) each. If the variable costs are \( \$ 1,225 \) per building and the fixed costs are \( \$ 1,000,000 \), (A) would they make a profit and (B) if so, how much?

To determine whether the \( O \& O \) Manufacturing Company will make a profit and, if so, how much, we'll analyze the revenue and costs involved. ### Given Data: - **Number of buildings sold:** 5,000 - **Selling price per building:** \$1,500 - **Variable cost per building:** \$1,225 - **Fixed costs:** \$1,000,000 ### (A) **Will they make a profit?** To find out if the company will make a profit, we need to compare the **total revenue** with the **total costs**. 1. **Total Revenue (TR):** \[ TR = \text{Number of buildings} \times \text{Selling price per building} = 5,000 \times \$1,500 = \$7,500,000 \] 2. **Total Variable Costs (TVC):** \[ TVC = \text{Number of buildings} \times \text{Variable cost per building} = 5,000 \times \$1,225 = \$6,125,000 \] 3. **Total Costs (TC):** \[ TC = TVC + \text{Fixed costs} = \$6,125,000 + \$1,000,000 = \$7,125,000 \] 4. **Profit (or Loss):** \[ \text{Profit} = TR - TC = \$7,500,000 - \$7,125,000 = \$375,000 \] Since the total revenue (\$7,500,000) exceeds the total costs (\$7,125,000), the company **will make a profit**. ### (B) **How much profit will they make?** As calculated above, the **profit** is: \[ \$375,000 \] --- **Summary:** - **(A)** Yes, the company will make a profit. - **(B)** The profit amount is \$375,000.