Question

A clothing store has ordered 100,000 swimsuits. It costs $22 to produce a swimsuit. They plan to sell them until August 31 at a price of $40 and then mark the price down to $30. Given values for demand through August 31 and after August 31, develop a worksheet to compute the profit from this order. (Hint: you select demand values. The point is to create a formula that will provide the correct profit for any demand level.)

Answer 1

Answer:

Total profit = $1800000  @ a given demand level of 100K units of swimsuit.

Explanation:

Lets first develop a formula representing the Total profit for any demand level, see as follows:

(Selling price per unit× d) - (cost per unit× d)= Total profit

We will be using the short forms of the components in this formula.

SP = selling price per unit

d= demand

cp= cost per unit

TP= Total profit.

Now lets substitute the values into the formula to compute profit at any demand level (in this case 100,000 units of swimsuits) as follows:

Total profit = ($40× 100000) - ($22× 100000)

Total profit = $4000,000 - $2200,000

Total profit = $1800000  @ a given demand level of 100K units of swimsuit.

(NOTE: The formula mentioned above can be used to compute the correct profit for any demand level, even though if there is a change in sp and/or cp, the formula can also be useful.)