Profit Analysis for Mr. Johnson's Eraser Sales

Much has been said about Mr. Johnson's eraser sales, with many questions revolving around his earnings and the cost basis. Let's dive into a detailed analysis using the information provided to understand Mr. Johnson's financial performance over the last two weeks.

Understanding the Problem

The scenario presented by Mr. Johnson selling erasers for $3 each and selling 96 erasers last week and 204 this week invites a straightforward but insightful exploration of his earnings. While some argue that additional costs should be factored in for a comprehensive analysis, let's focus on the revenue from these sales first. Here, we will calculate the total revenue for both weeks and then determine the difference in earnings.

Calculation of Total Revenue

To find out how much more Mr. Johnson made this week, we need to calculate the total revenue for both weeks and then find the difference.

Week 1

Revenue in Week 1  Number of Erasers Sold × Price per Eraser                    96 erasers × $3/eraser                    $288

Week 2

Revenue in Week 2  Number of Erasers Sold × Price per Eraser                    204 erasers × $3/eraser                    $612

Now, to find out how much more Mr. Johnson made this week, we subtract the revenue of Week 1 from the revenue of Week 2:

Calculating the Difference in Earnings

Additional Earnings This Week  Revenue in Week 2 - Revenue in Week 1                                     $612 - $288                                     $324

Thus, Mr. Johnson made $324 more this week compared to last week based solely on the revenue from eraser sales.

Further Considerations

While this calculation provides a clear picture of Mr. Johnson's earnings, in a real-world scenario, it is crucial to account for additional factors such as the cost per eraser, overhead costs, and any other expenses associated with selling the erasers. These expenses would be necessary to determine the actual profit, which is the net revenue after subtracting all costs.

For instance, if Mr. Johnson buys each eraser for $1, his cost would be:

Cost Calculation

Cost in Week 1  Number of Erasers Bought × Cost per Eraser                 96 erasers × $1/eraser                 $96

Cost in Week 2  Number of Erasers Bought × Cost per Eraser                 204 erasers × $1/eraser                 $204

His net profit would then be calculated as:

Net Profit Calculation

Net Profit in Week 1  Total Revenue - Cost                        $288 - $96                        $192Net Profit in Week 2  Total Revenue - Cost                        $612 - $204                        $408

The difference in net profit would then be:

Additional Net Profit This Week  Net Profit in Week 2 - Net Profit in Week 1                                  $408 - $192                                  $216

Thus, considering the cost per eraser, Mr. Johnson would have made $216 more in net profit this week compared to last week.

Conclusion

The initial question posed about Mr. Johnson's earnings provided a simple yet insightful way to understand his revenue in two different weeks. While the provided answer of $324 represents the increase in total revenue, a more detailed analysis, factoring in costs, reveals an even higher increase in net profit. This exercise highlights the importance of understanding both revenue and costs in any business endeavor.

Key Takeaways

Revenue is calculated by multiplying the number of items sold by the price per item. Profit (revenue minus costs) is crucial in understanding the true financial performance of a business. Cost-benefit analysis is essential for making informed business decisions.

By understanding these key concepts, businesses can better manage their finances and make strategic decisions to improve their profitability.