Fixed cost are 4500 per month, variable cost per mug is 5 and the company sells each mug for 10. Determine the monthly profit when the company sells 500 mugs?

First, let's calculate the total cost:

Fixed cost = $4500
Variable cost per mug = $5
Total variable cost for 500 mugs = $5 * 500 = $2500

Total cost = Fixed cost + Total variable cost
Total cost = $4500 + $2500
Total cost = $7000

Now, let's calculate the total revenue:

Selling price per mug = $10
Total revenue for 500 mugs = $10 * 500 = $5000

Now, let's calculate the profit:

Profit = Total revenue - Total cost
Profit = $5000 - $7000
Profit = -$2000

Therefore, the company will incur a monthly loss of $2000 when they sell 500 mugs.

Step 1: Calculate Total Variable Cost

Total Variable Cost = Variable Cost per Unit x Number of Units Sold
Total Variable Cost = $5 x 500 = $2,500

Step 2: Calculate Total Revenue

Total Revenue = Selling Price per Unit x Number of Units Sold
Total Revenue = $10 x 500 = $5,000

Step 3: Calculate Total Cost

Total Cost = Fixed Cost + Total Variable Cost
Total Cost = $4,500 + $2,500 = $7,000

Step 4: Calculate Profit

Profit = Total Revenue - Total Cost
Profit = $5,000 - $7,000 = -$2,000

Therefore, the company incurs a monthly loss of $2,000 when it sells 500 mugs.