retreading tires

Question

The fixed annual cost of recappping operations is $50,000. The variable cost of recapping a tire is $7. The company charges $20 a tire. For an annual volume of 10,000 tires, what is the total cost, total revenue and profit.

Answer 1

total cost = 10,000*7 +50000 = 120,000

total revenue = 10,000*20 = 200,000

profit = 80,000