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Question 831340: You sell widgets. Your equipment costs you a total of $1000. Each widget costs $100 to make, and you sell it for $200.
What is your revenue for selling X widgets?
What is your cost for making X widgets?
What is your profit for selling X widgets?
Found 2 solutions by stanbon, JulietG:
Answer by stanbon(75887)   (Show Source):
You can put this solution on YOUR website! You sell widgets. Your equipment costs you a total of $1000. Each widget costs $100 to make, and you sell it for $200.
What is your revenue for selling X widgets?:: 200X dollars
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What is your cost for making X widgets?:: 1000+100X dollars
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What is your profit for selling X widgets?::
Revenue - Cost = 200X - [1000+100X] = 100X-1000 dollars
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Cheers,
Stan H.
Answer by JulietG(1812)  (Show Source):
You can put this solution on YOUR website! Your fixed cost is $1000. Whether you make 1 or 1,000,000 widgets, this doesn't change. $100 * x is your variable cost. It changes based upon how many widgets you make.
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The formula, therefore, is:
Cost of making x widgets = 1000 (fixed) + x*100
Cost = 1000 + 100x
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The revenue is the gross amount you take in. Since each of them costs $200, it would be:
Revenue = 200x
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Your profit seems like a lot (100 on each item). That's the case if you sell a lot. But if you only sell a few, you'll be in the red due to your fixed cost.
Profit = Revenue - Cost
P = 200x - (1000+100x)
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Let's see how this works in the real world.
If you see 10 widgets, your revenue is 10*200=2000
Your cost would be 1000(fixed) + 10*100(variable) or 2000
Profit = 0
This is your break-even point.
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However, if you have a great marketing department and a great product, let's say you sell 90.
Revenue = 90*200 = 18000
Cost would be 1000(fixed) + 90*100(variable), or 11000
Profit = 7000
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