In a wax business two types are made, jar wax and tube wax. The selling price of jar wax is $\$ 4.00$ per unit and tube wax is $\$ 3.00$ per unit. Let $X_{1}$ be the number of units of jar wax sold and $X_{2}$ the number of units of tube wax sold. Direct costs for each type of wax are $\$ 0.025$ times the square of the number of units sold. Profit contribution for this business is given by
A) $4 X_{1}+3 X_{2}$
B) $4 X_{1}+3 X_{2}-0.025 X_{1}^{2}$
C) $4 X_{1}+3 X_{2}-0.025 X_{1}^{2}-0.025 X_{2}^{2}$
D) $4 X_{1}+3 X_{2}+0.025 X_{1}^{2}+0.025 X_{2}^{2}$

Question

Quizplus · Accepted Answer

The profit contribution is calculated by subtracting the direct costs from the revenue. The revenue for jar wax is $4X_1$ and for tube wax is $3X_2$. The direct costs are $0.025X_1^2$ for jar wax and $0.025X_2^2$ for tube wax. Therefore, the profit contribution formula is $4X_1 + 3X_2 - 0.025X_1^2 - 0.025X_2^2$.

In a Wax Business Two Types Are Made, Jar Wax $4.00\$ 4.00$4.00

In a Wax Business Two Types Are Made, Jar Wax $\$ 4.00$