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Thomas and Theresa work for a company that receives $75 for each unit of output
sold. The company has a variable cost of $30 per item and a fixed cost of
$12,000.
Based on this information, Thomas and Theresa make some projections
about potential profit.
Thomas states that for every 500 units of output sold, the company
will make $11,000 in profit.
Theresa states that for every 800 units of output sold, the company
will make $24,000 in profit.

Respuesta :

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Evaluating the statements made by Thomas and Theresa, we can conclude that, for every 800 units sold, the company will make a profit of $24000. Hence, Theresa is correct.

Total Expenses :

(Variable cost per unit × number of units + Fixed cost)

Let number of units = n

  • C(n) = 30n + 12000

Revenue :

  • R(n) = 75n

Profit, P(n) :

  • P(n) = R(n) - C(n)

Thomas statement :

n = 500

P(n) = 75(500) - [30(500) + 12000]

P(n) = 37500 - (15000 + 12000]

P(n) = 37500 - 27000

P(n) = $10500

Theresa statement :

n = 800

P(n) = 75(800) - [30(800) + 12000]

P(n) = 60000 - (24000 + 12000]

P(n) = 60000 - 36000

P(n) = $24000

Hence, Theresa's statement is correct.

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