Question

Gina Fox has started her own company, Foxy Shirts, which manufactures imprinted shirts for special oc- casions. Since she has just begun this operation, she rents the equipment from a local printing shop when necessary. The cost of using the equipment is $350. The materials used in one shirt cost $8, and Gina can sell these for $15 each.If Gina sells 20 shirts, what will her total revenue be? What will her total variable cost be?

Answer 1

Answer:

Total revenue = $300

Total variable cost = $160

Explanation:

The computation is as follows:

The total revenue equal to

= Number of shirts sold × selling price per shirt

= 20 shirts × $15

= $300

And, the variable cost equal to

= Number of shirts sold × materials used in one shirt

= 20 shirts × $8

= $160

The material used in one shirt is treated as a variable cost per shirt