Question

If Daniel sells 350 hamburgers at a price of \(\$ 3.25\) each, and his average cost of producing 350 hamburgers is \(\$ 3.00\) each, what is his profit?

Short answer

Daniel's profit is \$ 87.50.

Step-by-step solution

– Calculate the total revenue

First, multiply the selling price of each hamburger by the total number of hamburgers sold to find the total revenue. The selling price per hamburger is \(\$ 3.25\), and Daniel has sold 350 hamburgers. Therefore, the total revenue is \(\$ 3.25 * 350 = \$ 1137.50\).

– Calculate the total cost

Next, multiply the cost of production per hamburger by the total number of hamburgers sold to find the total cost. The cost of production per hamburger is \(\$ 3.00\), so the total cost is \(\$ 3.00 * 350 = \$ 1050.00\).

– Calculate the profit

Finally, subtract the total cost from the total revenue to find the profit. Therefore, the profit is \(\$ 1137.50 - \$ 1050.00 = \$ 87.50\).

Key concepts

Total Revenue

Understanding total revenue is key to calculating profit. Total revenue is the sum of money received from selling all goods or services. In our example, it is calculated by multiplying the selling price per unit by the number of units sold. Here, Daniel sells his hamburgers for \(3.25\) each. He sells 350 hamburgers. Thus, his total revenue is:

• Price per hamburger: \(\\(3.25\)
• Number of hamburgers: 350
• Total revenue: \(3.25 \times 350 = \\)1137.50\)

This total amount is essential to understand what goes into Daniel's pocket before he deducts any costs.

Total Cost

To determine profitability, it's vital to comprehend total costs. Total cost refers to the overall expense incurred in producing goods or services. In Daniel's scenario, the total cost is calculated by taking the cost of production per hamburger and multiplying it by the number of hamburgers sold. The individual cost for each hamburger is \(3.00\). With 350 hamburgers produced and sold, the total cost calculation is as follows:

• Cost per hamburger: \(\\(3.00\)
• Number of hamburgers: 350
• Total cost: \(3.00 \times 350 = \\)1050.00\)

This expense amount is what Daniel needs to cover before making any profit.

Basic Arithmetic Operations

Basic arithmetic operations form the foundation of profit calculation. They include addition, subtraction, multiplication, and division. In profit calculation, multiplication and subtraction are predominantly used. In Daniel's case, first, multiplication helps in calculating both total revenue and total cost. Then, to find out the profit, we use subtraction:

• Subtract the total cost from the total revenue
• Profit: Total Revenue minus Total Cost
• In numbers: \(1137.50 - 1050.00 = \$87.50\)

Understanding these basic operations can clarify how a business remains profitable or runs at a loss. Such fundamental math is crucial in the real-world application of economics and business.