To determined the profit is being maximized, you need to make sure that the difference between the total revenue and total cost is greatest. So the formula we need to use in determining the maximized profit is
Profit = Total Revenue - Total Cost
Given
TR = $5
TC = $4.10
Solution
Profit = 5 - 4.10
= 0.9
The answer is 0.9.
Answer:
Firm should not shut down, as it is able to cover its Average Variable Cost
Explanation:
Perfect Competition firms in Short Run : The firms produce even if their average revenue (price) < their average total costs (AC). They continue production until Average variable cost (AVC) ≥ per unit price (P) i.e average revenue (AR). This is called Shut Down Point. P lower beyond AVC implies that firm won't continue even in short run.
Given : Variable Cost (VC) = 500 ; Revenue (R) = 510
Average Variable Costs & Average Revenue are variable costs & revenue, per unit quantity. AVC = VC / Q ; AR (P) = R / Q
R i.e 510 > VC i.e 500
So, R/ Q i.e AR is also > VC / Q i.e AVC
Since AVC > AR (P), firm should not shut down
Answer:
$207000 is the sales revenue for the year.
Explanation:
The given situation is:
Sales Revenue 100%
Cost Of Goods sold <u> 60% </u>
Profit Margin 40%
Now we neither have sales revenue figure nor the profit margin figures but we can calculate cost of goods sold from the following formula:
Cost Of Goods Sold = Opening Inventory + Purchases - Closing Inventory
By putting values we have:
Cost Of Goods Sold = $54,000 + $109,800 - $39,600
Cost Of Goods Sold = $124,200
Now cost of goods sold is 60% which means if we want to go at 100% we will divide with the percentage at which we are standing (60%) and multiply with the percentage which we want to calculate (Sales is 100%).
Sales revenue = Cost of goods sold * 100% / 60%
Sales revenue = $124200 * 100% / 60% = $207,000
Greeting's!
<span>c. earnings before interest and taxes .
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