SOLUTION: A group is starting a business. They make an initial investment of $3,450.
The unit cost of the product is $3.25, and the selling price is $7.00.
Find equations for the total cos
Question 1101728: A group is starting a business. They make an initial investment of $3,450.
The unit cost of the product is $3.25, and the selling price is $7.00.
Find equations for the total cost C and the total revenue R for x units. Answer by Theo(13342) (Show Source):
You can put this solution on YOUR website! their initial investment is 3450.
this is a fixed cost.
their unit cost for selling the product is 3.25 * the number of products made.
their unit revenue for selling the product is 7.00 * the number of products sold.
the cost equation is:
cost = 3450 + 3.25 * x
the revenue equation is:
revenue = 7.00 * x
x represent the number of units made and sold.
they will start making a profit when the revenue exceeds the cost.
that's when 7.00 * x > 3450 + 3.25 * x
subtract 3.25 * x from both sides of this equation to get:
7.00 * x - 3.25 * x > 3450
simplify to get 3.75 * x > 3450
solve for x to get x > 3450 / 3.75.
this results in x > 920.
they will need to sell more than 920 units in order to start making a profit based on these revenue and cost equations.
when x = 920:
7.00 * x = 6440 and 3450 + 3.25 * x = 6440.
that's your break even point.
each unit sold above that will give a profit of 3.75 per unit.
for example:
921 units sold yields revenue of 6447 and cost of 6443.25.
profit is equal to 3.75.
