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Profit and Loss Analysis in Business

1. Greg bought a laptop for 28,000 pesos and spent an additional 2,500 pesos on spares. He later sold the laptop for 25,000 pesos, resulting in a loss of 5,500 pesos. 2. Martin bought 18 chairs for 6,300 pesos total. He sold 12 chairs for 7,200 pesos and the remaining 6 chairs for 1,800 pesos, for a total revenue of 7,200 pesos. This resulted in a profit of 900 pesos. 3. A mobile phone was sold for 4,800 pesos. If the profit was 20% of the selling price, then the cost of the phone was 3,840 pes

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Cristena Navarra
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685 views3 pages

Profit and Loss Analysis in Business

1. Greg bought a laptop for 28,000 pesos and spent an additional 2,500 pesos on spares. He later sold the laptop for 25,000 pesos, resulting in a loss of 5,500 pesos. 2. Martin bought 18 chairs for 6,300 pesos total. He sold 12 chairs for 7,200 pesos and the remaining 6 chairs for 1,800 pesos, for a total revenue of 7,200 pesos. This resulted in a profit of 900 pesos. 3. A mobile phone was sold for 4,800 pesos. If the profit was 20% of the selling price, then the cost of the phone was 3,840 pes

Uploaded by

Cristena Navarra
Copyright
© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
Available Formats
Download as DOCX, PDF, TXT or read online on Scribd

PROFIT AND LOSS

1. Greg bought a laptop for Php28,000 and spent Php2,500 for its spares. He later sold it for
Php25,000. How much is Greg’s loss?

Given:
Cost = 30, 500
*28,000+2,500
Net Sales = 25, 000

LOSS = Cost – Net Sales


= 30,500 – 25,000
LOSS = Php 5,500
2. Martin bought 18 chairs at Php350 each. He sold 12 of them at Php450 each, and the remaining
at Php300 each. Calculate his gain or loss.

Given:
Cost = 6,300
*18(350)
Net Sales = 7, 200
*12(450) + 6(300)

PROFIT = Net Sales – Cost


= 7, 200 – 6,300
PROFIT = Php 900

3. A mobile phone was sold for Php4,800. Find the cost of the mobile phone if the profit is 20%.

Given:
Net Sales = 4,800
Profit = 960
*4,800(0.20)

COST = Net Sales – Profit


= 4,800 – 960
COST = Php 3,840

BREAK EVEN ANALYSIS


Problem: The finance department of XYZ Battery modelled that the company’s cost function is
given by 𝐶 𝑥 = 156 + 19.7𝑥, where (𝑥) is the cost in thousand pesos for manufacturing and selling
𝑥 thousands of batteries. The department arrived at the price demand function given by 𝑝 𝑥 =
94.8 − 5𝑥, where (𝑥) is the price of each battery if 𝑥 thousands of battery are demanded.

1. How much is the price if 9,480 batteries were sold?


P(x) = 94.8 – 5x = 94.8 - 5 ( 9,480/ 1000)
P(x) = 47.4 (each)
Total Price = 9,480 (47.4) = Php 449, 352

2. Set up a revenue function.


R(x) = x[p(x)] = x [94.8 – 5x] = 94.8x – 5x²

3. Using the revenue function and the cost function, set up the equation for the profit
function
P(x) = R(x) – C(x)
= (94.8x – 5x² ) – (156 + 19.7x)
= 94.8x – 5x² – 156 -19.7x
P(x) = - 5x² + 75.1 x – 156

4. Find the break even points.


R = TC
94.8 - 5x²= 156 + 19.7x
94.8 - 5x² – 19.7x = 156
-5x² + 75.1x = 156
- 50x² + 751x = 1560

- 50x²+ 751x – 1560 = 0

50x ²- 751x + 1560 = 0

Use the quadratic formula:

−b ± √ b2−4 ac
x=
2a

−(−751)± √ (−751)2−4(50)(1560)
x=
2(50)

X1= 12.5300 (positive)

X2= 2.4900 (negative)


If x = 12.5300,

R(x) = 94.8x – 5x² = 94.8 (12.5300) – 5 (12.5300) ² = 402.8395

If x = 2.4900,

R(x) = 94.8x – 5x² = 94.8 (2.4900) – 5 (2.4900) ² = 205.0515

Hence, the break even points: (12.5300, 402.8395) , (2.4900, 205.0515)

[Link] the company experience loss if 12,000 batteries were sold? Justify.

Use the profit function;

P(x) = - 5x² + 75.1 x – 156

= - 5 ( 12,000/1000 ) ² + 75.1 ( 12,000/1000 ) - 156

P(x) = 25.2

The company will not experience loss, instead they will have a profit of 25.2. The answer came out as
positive, therefore it is a gain for the company

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