Total Revenue

&
Maximum Profit
By : Silka Triami (117111557)
Eka Pradnya Suari (117111408)
Ranggita Madhyastha (117111654)
Lingga Aqila Maharani (117111677)
 REVENUE

Revenue Is the maximum value that can be consumed by a person in

a period by expecting the same condition at the end of the period
as the original state.
Revenue by type of business:

 Industrial Company : Industrial companies earn income through the results

obtained from processing or producing raw materials into finished materials
which are then sold to consumers.
 Trading Company : Trading companies earn income due to the sale of
merchandise according to the purchase price of goods from factories
(industrial companies) plus specified profits.
 Service Company : Service companies obtain revenue from the results of
providing service services to consumers and obtain benefits from services
provided.
Several Types of Income

 Operating Income : Operating income is obtained from two sources including:

Gross sales are sales as usual (according to those listed on the invoice) before
deducting returns and sales deductions and Net sales, gross sales that have
been reduced by returns and sales discounts or related to the reduction of
other sales.
 Non-operating income : Non-operating income is obtained from two sources
including: Rental income is an income arising from the leasing of company
assets for other companies or entities and Interest income is an income that is
earned or received, one of the causes is like lending money to other parties.
TOTAL REVENUE

Total Revenue (TR) is the total revenue from the sale of output.
TR = P.Q
which is :
P = Price / price
Q = Quantity / Amount of goods
Example

Eka has a big business. She produced 5,000 units of food. If the price of each
item is 10,000 rupiah. then what is Eka's total income?
answer:
TR = P x Q = 10,000 x 5000
= 50,000,000 Rupiah
MAXIMUM PROFIT

Business is an organization that produces an item or service and from the

organization aims to achieve maximum profit. A profit in a business is a short-
term goal, and from that profit, it is expected that the business will continue to
run. In achieving maximum profit, it will certainly minimize costs and optimize
economic resources.Profit is the difference between total revenue (revenue) and
total cost (cost).Maximum Profit is a process carried out by a company to
determine the price and level of output that gives the greatest profit.
How To Analysis Maximum Profit

 Requests and Results of Sales

 Market and Company Demand
 Marginal, Average and Total Sales Results
Requests and Results of Sales

In analyzing a company's business to maximize profits there are two things that
must be considered, namely:
 Production costs incurred by the company
 Proceeds from sales of goods produced by the company.
Marginal, Average and Total Sales Results
Total Approach
Marginal Approach
Average Approach
Average Approach

Sales Results On average, for a company in a perfectly competitive market the average
sales (AR) is the price of goods produced by the company is Rp. 3000 then d0 = AR0 =
MRQ is the demand curve faced by the company. Thus this curve is the average sales
curve on the price of goods as much as Rp. 3000 (and expressed as AR. If the price of
goods sold by the company is Rp. 6000, curve d} = AR} = MRj is the demand curve and
also the sales curve on average at Rp. 6,000.
In seeking maximum profits with an average approach, namely combining perfect
competition with imperfect market competition.
Example
If known :
P = 120 - 0.02 Q
C = 60 Q + 25000
where P is the price per unit, while C is the total cost.
What is the maximum profit?
TR = P x Q Enter the Q value into the equation
= (120 - 0,02 Q) Q P = 20 - 0.02Q, then:
TR = 120Q - 0.02Q2 P = 120 - 0.02 (1500)
MR = TR ' = 120 - 30
MR = 120 - 0,04Q P = 90
MC = C ' The quantity and price to get maximum
MC = 60 profit are 1500 and 90 respectively.
Max profit = TR - TC
Maximum profit is = 120Q - 0.02Q2 - (60Q + 25000)
obtained when MR = = 120 (1500) - 0.02 (1500) 2 - 60 (1500)
MC, then: - 25000
120 - 0,04Q = 60 = 180000 - 45000 - 90000 - 25000
0.04Q = 120 - 60 = 20000
Q = 60 / 0.04
Q = 1500
The demand function of an item is shown by the equation P = -2Q + 100
a) Determine the total acceptance function (TR)
b) Determine the output (Q) at the maximum TR

a) TR = P x Q
TR = -2Q x 2 + 100Q

b) The maximum TR is when TR '= 0

TR = -2Q x 2 + 100Q
TR '= -4Q + 100
TR '= 0
-4Q + 100 = 0
4Q = 100
Q = 25