Question

two important business formulas used are: revenue = price * quantity sold profit = revenue - cost a local business believes it can sell 20,000 products each year. they expect their costs to be $687 thousand and want to earn a profit of $1,030,000. what price do they need to sell each product for? unattempted question 7

Answer 1

Given:

The quantity of products sold is n = 20000.

The cost of the product is C = $687000.

Expected profit amount is P = $1,030,000.

The objective is to find the selling price for each product.

Step-by-step explanation:

Consider the selling price for each product as S, and the formula for revenue of the company is given as,

`R=S* n\text{ . . . . .(1)}`

Similarly, the formula for profit is given as,

`P=R-C\text{ . . . . . (2)}`

Substitute the value of equation (1) in equation (2).

`P=(S* n)-C\text{ . . . . (3)}`

To find S :

On plugging the given values in equation (3),

`\begin{gathered} 1030000=(S*20000)-687000 \\ S=(1030000+687000)/(20000) \\ S=85.85 \end{gathered}`

Hence, the selling price of each product is $85.85.