Question

Use a spreadsheet to solve this business problem. The owners of an electronics store want to find which of their products makes the most profit during the past month. 200 computer monitors at $280 with a profit of 29% 40 DVD players at $350 with a profit of 38% 60 televisions at $700 with a profit of 22% 100 MP3 players at $200 with a profit of 40%

Answer 1

The company is making a profit of $44,000 when selling computers for $500. The graph will show a positive profit area above the AC curve and below the price of $500.

Step-by-step explanation:

To determine whether the company is making a profit or a loss when selling computers for $500, we need to calculate the total revenue and total costs.

Total revenue = Selling price x Quantity sold = $500 x 200 = $100,000

Total costs = Variable costs + Fixed costs

Variable costs = Variable cost per unit x Quantity sold = $280 x 200 = $56,000

Fixed costs = $0 (since it is not mentioned in the question)

Total costs = Variable costs + Fixed costs = $56,000 + $0 = $56,000

Profit = Total revenue - Total costs = $100,000 - $56,000 = $44,000

Therefore, the company is making a profit of $44,000 when selling computers for $500.

To sketch the graph, we can plot the Average Cost (AC) curve, Marginal Cost (MC) curve, and Average Variable Cost (AVC) curve against the quantity of output.

AC curve: AC represents the average cost per unit of output. It is calculated by dividing the total cost by the quantity of output. As the quantity of output increases, AC generally decreases.

MC curve: MC represents the additional cost of producing one more unit of output. It is calculated by dividing the change in total cost by the change in quantity of output. MC intersects the AC curve at its lowest point.

AVC curve: AVC represents the average variable cost per unit of output. It is calculated by dividing the total variable cost by the quantity of output.

Based on the profit of $44,000, the graph will show a positive profit area above the AC curve and below the price of $500.

Note: The graph cannot be visualized in this text-based format.

Answer 2

To determine the profit or loss, calculate the total cost and total revenue. If the company sells the computers for $500, the profit is $40,000.

Step-by-step explanation:

In order to determine the profit or loss, we need to calculate the total cost and total revenue for selling 200 computer monitors at $500 each. The total cost can be calculated by multiplying the number of units sold (200) by the cost per unit ($280), and the total revenue can be calculated by multiplying the number of units sold (200) by the selling price per unit ($500).

Profit or loss is determined by subtracting the total cost from the total revenue. If the result is positive, it indicates a profit, and if the result is negative, it indicates a loss. The profit or loss amount can be calculated as $40,000.

To represent this information graphically, we can create a graph with the average cost (AC), marginal cost (MC), and average variable cost (AVC) on the y-axis, and the quantity of output on the x-axis. The profit or loss can be shown as the difference between the total revenue and the total cost.