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The prices for all kinds of fish sold in Eastville's downtown Old Mark

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Joined: 03 May 2019
Posts: 12
Re: The prices for all kinds of fish sold in Eastville's downtown Old Mark  [#permalink]

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New post 18 Aug 2019, 15:30
How do you guys do this?

How do you guys get the right definition of more profitable?

Something is profitable if makes profit. But it is not more profitable if it makes more profit.

Something is only more profitable if for every dollar you put in, you make more than whatever you are comparing with.

The only way volume makes something more profitable is if your turnover is higher, or if the comparison's non-per-unit costs, including overhead costs are higher.

Just having volume doesn't increase your profitability because you still have to pay for that extra volume and your margins are the same as they were before. In this case, your margins are lower, making you less profitable on a per unit basis without taking into account overhead.

If your overhead is lower, volume helps you compensate. (Revenue (which if volume x price) - costs (volume x cost of individual item + fixed costs) / costs will be higher. (Revenue - costs )/ Revenue will be higher as your costs are lower.

If your electricity bill was lower than your competitors, it would help explain why volume might increase your profitability.

If you overhead costs are the same, the fact that you are selling more fish for just less doesn't make you more profitable.
Intern
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Joined: 16 Jul 2019
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Re: The prices for all kinds of fish sold in Eastville's downtown Old Mark  [#permalink]

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New post 17 Sep 2019, 13:18
Can any of the experts please explain how option E is a strengthener?

Thanks!

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Re: The prices for all kinds of fish sold in Eastville's downtown Old Mark   [#permalink] 17 Sep 2019, 13:18

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