Enter the total revenue and total cost into the calculator to determine the maximum profit. This calculator can also evaluate any of the variables given the others are known.
Max Profit Formula
The following formula is used to calculate the maximum profit.
Max Profit = TR - TC
Variables:
- Max Profit is the maximum possible financial gain ($)
- TR is the total revenue ($)
- TC is the total cost ($)
To calculate the maximum profit, subtract the total cost from the total revenue. The difference between these two values represents the maximum possible financial gain that can be achieved from a particular transaction or series of transactions.
What is a Max Profit?
Max Profit refers to the highest possible financial gain that a business or individual can achieve from a particular transaction or series of transactions. It is the point where the difference between total revenue and total cost is the greatest. This concept is crucial in business decision-making processes, as it helps determine the most profitable strategies and actions. Factors influencing max profit include sales price, production costs, demand, and market competition.
How to Calculate Max Profit?
The following steps outline how to calculate the Max Profit.
- First, determine the total revenue (TR) ($).
- Next, determine the total cost (TC) ($).
- Next, gather the formula from above = Max Profit = TR – TC.
- Finally, calculate the Max Profit.
- After inserting the variables and calculating the result, check your answer with the calculator above.
Example Problem :
Use the following variables as an example problem to test your knowledge.
total revenue (TR) ($) = 150
total cost (TC) ($) = 100
