A company produces widgets with a fixed cost of $1,000 and a variable cost of $5 per widget. If each widget is sold for $15, how many widgets must be sold to achieve a profit of $2,000?

Sun, 03 May 2026 16:42:38 +0000

**Why Understanding Cost-Based Profit Is Key in Today’s Dynamic Market** In an era where businesses are constantly optimizing for efficiency and scalability, grasping how fixed and variable costs shape profitability is more relevant than ever. For entrepreneurs, startups, and even individuals exploring new revenue models, knowing how many units need to be sold to reach a defined profit goal helps inform budgeting, pricing, and operational planning. A classic yet persistent question—what profit margin is required when fixed and variable costs are locked in—remains central to smart financial decision-making across industries. One such scenario unfolds with a company producing widgets. With a fixed cost of $1,000—encompassing setup, equipment, and overhead—and a variable cost of $5 per unit, selling each widget at $15, the path to a $2,000 profit reveals essential principles of cost analysis. This problem isn’t just academic; it mirrors real-world decisions made daily by small businesses, makers, and innovators navigating profitability under constrained or growing costs. But how many widgets must be sold to bridge the gap between operational expense and target earnings? The answer, strikingly precise, lies not in guesswork—but in a clear formula rooted in basic math and real-world business logic.