Calculate the profit per bag for the bags sold at $2 each, using the table provided.
| Sales Price | Estimated Sales | Fixed Cost | Fixed Cost per Unit | Variable Cost | Total Cost |
|---|---|---|---|---|---|
| $1.00 | 700,000 bags | $250,000 | $0.36 | $0.50 | $0.86 |
| $2.00 | 450,000 bags | $250,000 | $0.56 | $0.50 | $1.06 |
Answer (2)
The sales price per bag is $2.00.
The fixed cost per unit is $0.56 and the variable cost per unit is $0.50.
The total cost per bag is $0.56 + $0.50 = $1.06.
The profit per bag is $2.00 - $1.06 = \boxed{{$0.94}}.
Explanation
Understanding the Problem We are given a table with sales and cost information for bags of chips sold at two different prices. We need to calculate the profit per bag when the chips are sold at $2 each.
Sales Price The sales price per bag is $2.00.
Fixed Cost per Unit The fixed cost per unit is $0.56.
Variable Cost per Unit The variable cost per unit is $0.50.
Calculating Total Cost The total cost per bag is the sum of the fixed cost per unit and the variable cost per unit. So, the total cost per bag is $0.56 + $0.50 = $1.06.
Calculating Profit per Bag The profit per bag is the sales price per bag minus the total cost per bag. So, the profit per bag is $2.00 - $1.06 = $0.94.
Final Answer Therefore, the profit per bag for the bags sold at $2 each is $0.94.
Examples
Understanding profit margins is crucial in business. For example, if you're selling lemonade, knowing your cost per cup (lemons, sugar, cups) and your selling price helps you determine how much profit you make per cup. This calculation guides pricing strategies, helps you understand if your business is sustainable, and informs decisions about scaling up or cutting costs. Calculating profit per unit is a fundamental aspect of financial literacy and business management.
The profit per bag when sold at $2 each is $0.94. This profit is calculated by subtracting the total cost of $1.06 from the sales price. Understanding profit calculations helps in making informed business decisions.
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