A small-business owner seeks to maximize both total revenue and profit. When she prepares her annual business plan, the owner and her team determine the expenditures that are required to reach the revenue goals she has set for the upcoming year. To maximize profit, she has to carefully control costs and make difficult decisions about which expenditures are absolutely necessary. By understanding the relationship between total revenue, profit and total costs -- RPC for short -- she can see how each of the decisions she makes impacts her profitability.
