Let Q = quantity produced, P = selling price per unit, VC = variable cost per unit, and TFC = total fixed cost. Which of the following equations is correct?
A) Profit = Q × (P - VC) + TFC
B) Profit = Q × (P - VC) - TFC
C) Profit = Q × (P - VC - TFC)
D) Profit = Q × (P - VC + TFC)

Question

Quizplus · Accepted Answer

Profit is calculated by subtracting total costs (variable and fixed) from total revenue. The correct formula is Profit = Q × (P - VC) - TFC, where Q × (P - VC) calculates total revenue minus variable costs, and then TFC is subtracted to account for fixed costs.

Let Q = Quantity Produced, P = Selling Price Per