Question

Farah’s Fashions (FF) produces stylish garments. The estimated cost to produce each garment is ($12 + ($64/x)) per garment, where x is the number of garments produced/sold. FF can currently sell 30 garments for $24 each. What is the current profit per garment and total profit for FF? A new customer has offered to buy an additional 20 garments, but wants a discount of $5 per garment, should you sell the 20 garments to the new customer? Assuming your old customers find out and also demand the discount, should you still sell the 20 garments to the new customer? What is FF’s total profit if they take the new customer?

Answer 1

Cost of each garment (x)=	$12 + ($64/x)
Total cost of 30 garments =	12*30 + 64 = 424
Cost of one garment =	424/30 = 14.13
Selling price of each garment =	$24
total sales =	30 * 24 =720
Total profit for FF =	720 - 424 =296
No, we should not sell the garments to the
new customer at discount because our total
profit decrease by $10 on providing discount.
Details:
So, Total profit on selling regular & new are:
Total Cost of 50 garments =	12*50 + 64 = 664
Discounted selling price per garment =	$19
Total Sales of selling 50 garments =	50 * 19 = 950
Total profit on selling to new customer =	950 - 664 = 286