Jeremy and Justine work for a company that receives $45 for each unit of output sold. The company has a variable cost of $25 per item and a fixed cost of $1600.
Based on this information, Jeremy and Justine make some projections about potential profit.
• Jeremy states that for every 100 units of output sold, the company will make $3,600 in profit.
• Justine states that for every 300 units of output sold, the company will make $4,400 in profit.

Jeremy states that for every 100 units of output sold, the company will make $3,600 in profit.
Justine states that for every 300 units of output sold, the company will make $4,400 in profit.

The missing question is ⇒ who is true? Jeremy or Justine

Assume that the company sold x units

∵ The selling price is $45 for each unit

∵ The company sold x units

∴ The total selling price = 45 x

∵ The cost of each unit is $25

∵ The fixed cost is $1600

∴ The total cost = 25 x + 1600

∵ Potential profit = total selling price - total cost price

∴ Potential profit = 45 x - (25 x + 1600)

- Simplify the expression

∴ Potential profit = 45 x - 25 x - 1600

- Add like terms

∴ Potential profit = 20 x - 1600

Jeremy states that for every 100 units of output sold, the company

will make $3,600 in profit

∵ The units of output sold = 100

∴ Potential profit = 20(100) - 1600 = $400

∵ The Potential profit ≠ $3,600 as Jeremy states

∴ Jeremy is not true

Justine states that for every 300 units of output sold, the company

will make $4,400 in profit

∵ The units of output sold = 300

∴ Potential profit = 20(300) - 1600 = $4400

∵ The Potential profit $4,400 as Justine states

∴ Justine is true

Justine is true

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