If company A manufactures t-shirts and sells them to retailers for US$9.80 each It has fixed costs of $2625 related to the production of the t-shirts, and the production cost per unit is US$2.30. Company B also manufactures t-shirts and sell them directly to consumers. The demand for its product is p = 15 − x/125 ,its production cost per unit is US$5.00 and its fixed cost are the same as for company A. Derive the total revenue function, R(x) for company. Derive the profit function, Π(x) for company. How many t-shirts must company B sell to in order to break-even? How many t-shirts must company B sell to maximize its profit?

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Cost of Production

In economic theory, production costs are the costs incurred by an industrial organization when it engineers a project or provides a service that generates revenue and benefits. Labor costs, raw materials, consumable manufacturing costs, and general overhead sum up, accounting for production costs. Total cost data is calculated by combining total direct costs of materials, labor costs, and total production costs.