Question

The fixed costs to produce a certain product are 25,000 and the variable costs are $12.00 per item. The revenue for a certain product is $17.00 each. If the company sells x products, then what is the revenue equation ?

Answer 1

Revenue= $(5x-25 000)

Explanation:

The company required to invest 25,000 for a product, also the production cost is $12 per item. This will be accounted in the expenditure of the company.

Let the number of item be x.

The total expenditure of the company in production of x items= 25000+12x

Revenue generated by the company by selling x items=17x

The net profit= Revenue Generated - Total Expenditure

Revenue=17x-(12x+25000)

= 17x- 12x - 25000

= 5x - 25000

The net profit is $(5x - 25000).