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 Posted: Wed Feb 03, 2010 5:05 pm
A company produces very unusual CD's for which the variable cost is $ 15 per CD and the fixed costs are $ 50000. They will sell the CD's for $ 75 each. Let be the number of CD's produced.
Write the total cost as a function of the number of CD's produced.
$
Write the total revenue as a function of the number of CD's produced.
$
Write the total profit as a function of the number of CD's produced.
$
Find the number of CD's which must be produced to break even.
The number of CD's which must be produced to break even is
...ouch that was a lot of typing...
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Posted: Thu Feb 04, 2010 1:00 pm
Ok so lets interpret this, to be honest, I'm not exactly sure what the mean by "the fixed costs are $50,000" I think what it means is the the cost of running the store is $50,000, to make the problem make sense. Because you are already making a profit on the CD's because your selling them each for $50 a piece profit.
Ok the 1st one. Lets make C the cost, and x the number of CD's. The cost is simply $15 times the number of CD's made
So C=15*x
Next, lets call the revenue R, and the amount of CD's x. Ok so the revenue is the total amount of money you made which is simply $75 times the number of CD's you sold
So R=75*x
The profit is calculated by taking the revenue (the amount of money made) and subtracting the cost. R-C
75x-25x=50x
which means we make $50 per CD, which is what we suspected from the beginning.
To answer the last question we need to use our fixed cost $50,000. How many CDs do we have to sell to make that much money? Well just set up the equation
50x=50,000
x=1000
so we need to sell 1000 cd's to break even with our cost.
Any Questions?
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Posted: Thu Feb 04, 2010 1:34 pm
Awesome got it ^^
Now I can finish the others.
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Posted: Fri Feb 05, 2010 10:09 pm
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