The table shows the estimated sales for two different prices of bags of chips. Calculate the profit per bag for the bags sold at $3 each.
| Sales Price | Estimated Sales | Fixed Cost | Fixed Cost per Unit | Variable Cost | Total Cost |
| ----------- | --------------- | ---------- | ------------------- | ------------- | ---------- |
| $2.00 | 1,200,000 bags | $300,000 | $0.25 | $0.40 | $0.65 |
| $3.00 | 600,000 bags | $300,000 | $0.50 | $0.40 | $0.90 |
Answer (2)
The sales price per bag is $3.
Calculate the total cost per bag by adding the fixed cost per unit ($0.50) and the variable cost ($0.40), resulting in a total cost of $0.90.
Calculate the profit per bag by subtracting the total cost ($0.90) from the sales price ($3.00).
The profit per bag is $\boxed{ 2.10} .
Explanation
Understanding the Problem We are given the sales price, estimated sales, fixed cost, fixed cost per unit, variable cost, and total cost for bags of chips sold at $3 each. We need to calculate the profit per bag.
Sales Price The sales price per bag is $3.
Calculating Total Cost The fixed cost per unit is $0.50, and the variable cost is 0.40. T h ere f ore , t h e t o t a l cos tp er ba g i sc a l c u l a t e d b y a dd in g t h e f i x e d cos tp er u ni t an d t h e v a r iab l ecos t : T o t a lC os t = F i x e d C os tp er U ni t + Va r iab l e C os t $Total Cost = $0.50 + $0.40 = 0.90 $
Calculating Profit The profit per bag is the difference between the sales price and the total cost: P ro f i t = S a l es P r i ce − T o t a lC os t Profit = $3.00 - $0.90 = $2.10
Examples
Understanding profit margins is crucial in business. For instance, if you're selling lemonade, knowing your cost per cup (including lemons, sugar, and cups) and your selling price helps you determine how much profit you make per cup. This calculation is essential for setting prices, understanding business viability, and making informed decisions about scaling your operations. Similarly, companies use profit per unit to assess the profitability of different products and optimize their pricing strategies.
The profit per bag for bags of chips sold at $3 is calculated by subtracting the total cost of $0.90 from the sales price of $3. This results in a profit of $2.10 per bag. Therefore, the profit is $2.10.
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