Answer:
The firm has a loss of $70,000.
Explanation:
To find the firm's gain or loss at sales of 5,000 watches you have to use the formula to calculate the net income:
Net income=sales-cost of goods sold
Sales=$24*5,000
Sales=$120.000
Cost of goods sold=$115,000+($15*5,000)
Cost of goods sold=$115,000+$75,000
Cost of goods sold=$190,000
Net income=$120,000-$190,000
Net income=-$70,000
According to this, the firm has a loss of $70,000.
