Question

A team of three laborers in Mongolia makes rugs by hand for export to the United States. The team works 14 hours a day, six days a week, 50 weeks a year, and is able to make 12 rugs a year. Each laborer is paid a wage that is equivalent to $1.10 per day. The rugs sell for $2,000 each in the United States.

Answer 1

Given:
3 laborers
works 14 hours a day, 6 days a week, 50 weeks a year
makes 12 rugs a year
material cost 50 per rug
Each laborer is paid a wage of 1.10 per day
rugs sell for 2,000 each in the US
fixed cost 10,000 per year

1.10 per day * # days per year * 3 laborers
50 weeks;/y * 6 days/week = 50 * 6 = 300 days a year
1.10 per day * 300 days a year * 3 laborers = 990 total labor cost

total material cost:
50 per rug * 12 rugs = 600 

total revenue:
2,000 x 12 rugs = 24,000

total profit:
total revenue:          24,000
less:
material cost                 600
labor cost                      990
fixed cost                 10,000
profit                        12,410