The Math-Is-Fun T-shirt Company manufactures and sells screen-printed t-shirts. The fixed costs of operation for the company are $75,750 per month. T-shirts are sold to wholesale buyers for $8.99 each, but only cost the company $3.20 each to produce. If the T-shirt Company manufactures and sells 50,000 T-shirts in July, what will be their net profit for the month?
cost: 75750 + 50000*3.20
revenue: 50000*8.99
profit: 50000*(8.99-3.20) - 75750 = 213,750
Technically, this is the gross profit. If you subtract other costs like taxes, insurance, etc. what's left is the net profit. Gross profit is just based on the revenue/cost of goods, and does not include other, maybe variable costs.
To calculate the net profit for the month, we need to consider the revenue and the expenses.
To find the revenue, we multiply the number of t-shirts sold by the selling price per t-shirt. In this case, the company sells 50,000 t-shirts at a price of $8.99 each. So the revenue can be calculated as follows:
Revenue = Number of t-shirts sold × Selling price per t-shirt
Revenue = 50,000 × $8.99
To find the expenses, we need to consider both the fixed costs and the variable costs. The fixed costs are given as $75,750 per month. The variable costs are the cost to produce each t-shirt, which is $3.20 per t-shirt. The total variable cost can be calculated by multiplying the cost per t-shirt by the number of t-shirts sold:
Variable costs = Cost per t-shirt × Number of t-shirts sold
Variable costs = $3.20 × 50,000
Now, we can calculate the net profit by subtracting the total expenses (fixed costs + variable costs) from the revenue:
Net profit = Revenue - (Fixed costs + Variable costs)
Net profit = (50,000 × $8.99) - ($75,750 + (3.20 × 50,000))
By substituting the given values, we can find the final answer.