Understanding Profit in Business: A Practical Example with Oranges

In the world of business, understanding how to calculate profit or loss is fundamental. This guide will walk you through a practical example, involving the purchase and sale of oranges to illustrate the key concepts of cost, revenue, and profit.

Introduction to Profit and Loss

Profit and loss are essential concepts in business mathematics. When you buy goods and sell them, the difference between the total cost and total revenue gives you the profit or loss. This article will walk you through a specific example, including the steps to calculate the profit from selling oranges.

Cost and Revenue Calculation

In the given example, we have a scenario where 3 dozen oranges were bought at $15 per dozen and sold at $1.50 each. Let's break down the calculation step by step.

Total Cost of Oranges

The first step is to determine the total cost of the oranges. Since 3 dozen oranges were purchased at $15 per dozen:

```math text{Total Cost} 3 text{ dozen} times 15 text{ dollars/dozen} 45 text{ dollars} ```

Total Number of Oranges

Next, we need to find out the total number of oranges purchased. Since there are 12 oranges in a dozen:

```math text{Total Oranges} 3 text{ dozen} times 12 text{ oranges/dozen} 36 text{ oranges} ```

Total Revenue from Selling Oranges

After determining the number of oranges, we then calculate the total revenue generated from selling each orange at $1.50:

```math text{Total Revenue} 36 text{ oranges} times 1.50 text{ dollars/orange} 54 text{ dollars} ```

Calculating Profit or Loss

Finally, to find out the profit, we subtract the total cost from the total revenue:

```math text{Profit} text{Total Revenue} - text{Total Cost} 54 text{ dollars} - 45 text{ dollars} 9 text{ dollars} ```

Thus, the profit made on the sale of all the oranges is $9.

Miscellaneous Calculations

For additional clarity, let's perform some alternative calculations:

Profit per Orange

To find the profit per orange, we can divide the total profit by the total number of oranges:

```math text{Profit per Orange} frac{9 text{ dollars}}{36 text{ oranges}} 0.25 text{ dollars/orange} ```

Alternatively, we can break down the problem as follows:

```math 15 text{ dollars/dozen} times 3 text{ dozen} - 3 times 12 text{ oranges} times 1.50 text{ dollars/orange} 45 text{ dollars} - 54 text{ dollars} -9 text{ dollars} ```

This calculation shows that the total revenue is $54, and the total cost is $45, leading to a profit of $9.

Conclusion

By following these steps, we can accurately calculate the profit or loss in any business transaction involving the purchase and sale of goods. The given example demonstrates that buying 3 dozen oranges at $15 per dozen and then selling each orange for $1.50 results in a profit of $9. This guide is particularly useful for those looking to enhance their understanding of cost and revenue analysis in business math.