SOLUTION: Randy Ko is a t-shirt vendor. The fixed cost of any order if $7500, the variable cost is $20 per shirt. Randy's selling price is $120 per shirt, until a week after the tournament w

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Question 979996: Randy Ko is a t-shirt vendor. The fixed cost of any order if $7500, the variable cost is $20 per shirt. Randy's selling price is $120 per shirt, until a week after the tournament when it will drop to $75 a piece. The expected demand at full price is 1500 shirts. How much profit will he earn?
Answer by ankor@dixie-net.com(22740) About Me  (Show Source):
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The fixed cost of any order if $7500, the variable cost is $20 per shirt.
Randy's selling price is $120 per shirt, until a week after the tournament when it will drop to $75 a piece.
The expected demand at full price is 1500 shirts.
How much profit will he earn?
:
Find the cost to produce 1500 shirts
c = 7500 + (1500*20)
c = $37500 total cost
l
Find the revenue from selling 1500 shirts
r = 1500*120
r = $180,000
:
profit = reve - cost
p = 180000 - 37500
p = $142,500 profit