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What are rick revenues

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Reference no: EM132856870

Rick Miles runs a CD-making business. He forecasts demand for his CDs at 5000 for the next year. He charges $20 per CD sold. It costs him $2000 in fixed costs a year to run his business and $2 per CD in variable costs.

a. What are Rick's revenues?

b. What are Rick's costs?

c. Does Rick make a profit?

Answer:

Demand= 5000

Selling Price per CD=$ 20

a) Revenue= Demand*Cost Per Unit= 5000*20= 100,000$

b) Costs-Fixed Cost= $2000

Variable Cost=$ 2 per CD

Total Variable Cost= 5000*2= $10000

Total Cost= FC+VC= 2000+10000= $12000

c) Profit= Revenue-Cost= 100,000-12000=$ 88,000

Reference no: EM132856870

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