Chapter 01 Examples
Ahmed sells footballs at KASC. He gets them from the supplier for SR. 200 and sells them for
SR. 300. Ahmed needs to pay the rent for the booth to stadium authorities as SR. 10000. Also, he
must pay salaries to the employees for SR. 20000. Find revenue, total variable cost, total cost,
and profit if Ahmed sold 450 footballs.
s=SR 300 , v =SR 200 , f =SR30,000 , X =450
R=sX
¿ 300 × 450
R=SR 135,000
TVC =vX
¿ 200 × 450
TVC =SR 90,000
TC=f + TVC
¿ 30000+90000
TC=SR120,000
Profit=R−TC
¿ 135000−120000
Profit=SR 15,000
From the above problem, find the breakeven point for Ahmed.
f
X for BEP=
s−v
30000
¿
300−200
30000
¿
100
X for BEP=300 Footballs
If Ahmed would like to make a profit of SR 20,000, how many units does he need to sell?
f +TP
X for TP=
s−v
30000+20000
¿
300−200
50000
¿
100
X for TP=500 Footballs
Layla sells biscuits to schools. She gets them from the supplier for SR 3 and sells them for SR 5.
She needs to pay salaries to her employees every month for SR 25,000. Also, she needs to pay
the rent for the warehouse for SR 15,000. Find the breakeven point. Also, find revenue, total
variable cost, total cost, and profit if Ahmed sold 25,000 biscuits.
s=SR 5 , v=SR 3 , f =SR 40,000 , X=25,000
f
X for BEP=
s−v
40000
¿
5−3
X for BEP=20,000 Biscuits
R=sX
¿ 5 ×25000
R=SR 125,000
TVC =vX
¿ 3 ×25000
TVC =SR 75,000
TC=f + TVC
¿ 40000+ 75000
TC=SR115,000
Profit=R−TC
¿ 125000−115000
Profit=SR 10,000
From the above problem, if Layla would like to have a profit of SR 8000, how many biscuits
should she sell?
f +TP
X for Target Profit=
s−v
40000+8000
¿
5−3
48000
¿
2
X for Target Profit=24000 Biscuits