Question

A production process requires a fixed cost of $ 50,000. The variable cost per unit is $ 25 and the revenue per unit is projected to be $ 45. Write a mathematical expression for total profit?

Answer 1

Answer:

y = $ 20 x - $ 50,000

Explanation:

A mathematical expression for total profit can be taken out of the Cost Volume Profit analysis as follows :

Total Profit = Contribution - Fixed Costs

where,

Contribution = Sales - Variable Costs

                     = $ 45 - $ 25

                     = $ 20

therefore,

if x units are sold the mathematical expression for total profit y can be determined as :

y = $ 20 x - $ 50,000