You now want to operate an ice-cream firm. You have all the necessary apparatus to work with. Now the fixed cost( the cost incurred for non operating your machines without any production examples the electricity bill, phone calls, etc which are not directly related to production)is $1000 and a variable cost of $5 per every unit of ice-cream produced.
You have decided to sell each unit for $10.
a) write the relation for the total cost(a relation connecting fixed cost and variable cost)
b) write a relation for the revenue(a relation for selling the ice-cream)
i)find the cost of producing 500 units of ice-cream
ii)find the expected profit for producing 500 units of ice-cream.
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i have try to solve
a) The relation for the total cost can be expressed as:
Total Cost = Fixed Cost + (Variable Cost per Unit * Number of Units)
In this case, the fixed cost is $1000 and the variable cost per unit is $5.
b) The relation for the revenue can be expressed as:
Revenue = Selling Price per Unit * Number of Units
In this case, the selling price per unit is $10.
i) To find the cost of producing 500 units of ice-cream, we need to substitute the values into the total cost equation:
Total Cost = $1000 + ($5 * 500)
Total Cost = $1000 + $2500
Total Cost = $3500
Therefore, the cost of producing 500 units of ice-cream is $3500.
ii) To find the expected profit for producing 500 units of ice-cream, we need to calculate the revenue and subtract the total cost from it:
Revenue = $10 * 500
Revenue = $5000
Total Cost = $3500 (as calculated in part i)
Profit = Revenue - Total Cost
Profit = $5000 - $3500
Profit = $1500
Therefore, the expected profit for producing 500 units of ice-cream is $1500.