As.1997
Badges: 16
Rep:
?
#1
Report Thread starter 1 month ago
#1
Please refer to the attachment.
The answer explanation tells us:
0.89x1792= 1594.88 profit lost. This doesn't quite make sense as they haven't considered the cost.

(still quite unsure about this question so please do put your ideas in)
Attached files
Last edited by As.1997; 1 month ago
0
reply
Muttley79
Badges: 20
Rep:
?
#2
Report 1 month ago
#2
(Original post by As.1997)
Please refer to the attachment.
??
0
reply
As.1997
Badges: 16
Rep:
?
#3
Report Thread starter 1 month ago
#3
(Original post by Muttley79)
??
Just edited - with the attachment
0
reply
Muttley79
Badges: 20
Rep:
?
#4
Report 1 month ago
#4
(Original post by As.1997)
Just edited - with the attachment
We just need to consider the lost profit which is related to the waste.
0
reply
As.1997
Badges: 16
Rep:
?
#5
Report Thread starter 1 month ago
#5
(Original post by Muttley79)
We just need to consider the lost profit which is related to the waste.
Shouldn't they say "lost revenue" as "lost profit" to me means find the lost revenue and exclude the cost to get the lost profit?
0
reply
Muttley79
Badges: 20
Rep:
?
#6
Report 1 month ago
#6
(Original post by As.1997)
Shouldn't they say "lost revenue" as "lost profit" to me means find the lost revenue and exclude the cost to get the lost profit?
Sorry I need to go - read the question again - I think you have misunderstood.
0
reply
mqb2766
Badges: 18
Rep:
?
#7
Report 1 month ago
#7
The long winded explanation shows this is correct, i.e. the lost profit.

However the short solution misses out an explanation. Let P, Pa, S and C be the theoretical profit, actual profit, theoretical sales and cost respectively. Then
Pa = 0.77S - C
So this is the profit on what the store sells.
P = S - C
This is the theoretical profit.
Subtract the two gives
P-Pa = 0.23S
It looks like revenue as it only depends on sales, but it is the lost profit. The production cost information is subtracted out.
Last edited by mqb2766; 1 month ago
0
reply
As.1997
Badges: 16
Rep:
?
#8
Report Thread starter 1 month ago
#8
(Original post by mqb2766)
The long winded explanation shows this is correct, i.e. the lost profit.

However the short solution misses out an explanation. Let P, Pa, S and C be the theoretical profit, actual profit, theoretical sales and cost respectively. Then
Pa = 0.77S - C
So this is the profit on what the store sells.
P = S - C
This is the theoretical profit.
Subtract the two gives
P-Pa = 0.23S
It looks like revenue as it only depends on sales, but it is the lost profit. The production cost information is subtracted out.
Perfect. Thank you!
I didn't recognize it was the same thing until you showed it algebraically. Without the proof, I find it difficult to see how the selling price x no. of wasted items = lost profit, so I guess I would be forced to do it the long way?
0
reply
mqb2766
Badges: 18
Rep:
?
#9
Report 1 month ago
#9
(Original post by As.1997)
Perfect. Thank you!
I didn't recognize it was the same thing until you showed it algebraically. Without the proof, I find it difficult to see how the selling price x no. of wasted items = lost profit, so I guess I would be forced to do it the long way?
Or write the information down clearly like that.
Sometimes intuition fails us and either you need to explicitly state the info or work it out the long way. The Monty Hall problem is a good example where intuition is often wrong.
0
reply
mqb2766
Badges: 18
Rep:
?
#10
Report 1 month ago
#10
(Original post by As.1997)
Perfect. Thank you!
I didn't recognize it was the same thing until you showed it algebraically. Without the proof, I find it difficult to see how the selling price x no. of wasted items = lost profit, so I guess I would be forced to do it the long way?
The "obvious" way of looking at it is that you've already spent the money on priduction, so any revenue gained from selling "waste" is pure profit. Therefore the profit difference is the revenue gained from selling the wastage.

Obviously, this "obvious" is an hour or so later.
0
reply
As.1997
Badges: 16
Rep:
?
#11
Report Thread starter 1 month ago
#11
(Original post by mqb2766)
The "obvious" way of looking at it is that you've already spent the money on priduction, so any revenue gained from selling "waste" is pure profit. Therefore the profit difference is the revenue gained from selling the wastage.

Obviously, this "obvious" is an hour or so later.
That makes sense. Though it is still quite funny
0
reply
X

Quick Reply

Attached files
Write a reply...
Reply
new posts
Back
to top
Latest
My Feed

See more of what you like on
The Student Room

You can personalise what you see on TSR. Tell us a little about yourself to get started.

Personalise

Current uni students - are you thinking of dropping out of university?

Yes, I'm seriously considering dropping out (177)
14.46%
I'm not sure (56)
4.58%
No, I'm going to stick it out for now (360)
29.41%
I have already dropped out (35)
2.86%
I'm not a current university student (596)
48.69%

Watched Threads

View All
Latest
My Feed