A company is engaged in direct marketing of exercise CDs that sell for $ 18, including shipping and handling. The monthly fixed costs (advertising, rent, etc.) are $ 24000 and the variable costs (materials, shipping, etc) are $ 6 per CD.
Ok so far I'm here: 24000+6x as my cost function...
How do I find my revenue function and the break even points???
2007-11-25 15:57:47 · 3 answers · asked by RedSparkle 1 in Science & Mathematics ➔ Mathematics
Thanx for ur help, but my revenue function as you guys are telling me is not right...my comp is not accepting it????
I already set my cost function equal to 18x....but for some reason is not working!!!
2007-11-25 16:39:21 · update #1
You're almost there.
The revenue function is the money you make per cd and that is
18x
so, you want a point where your costs equal the profits. So, let the cost function = the revenue function :
24000 + 6x = 18x
24000 = 12x
2000 = x
So, you have to sell 2000 cds to have a break even point
after selling 2000 cds you would start to make profit.
Good LUck!
2007-11-25 16:02:58 · answer #1 · answered by Mohsin 3 · 0⤊ 0⤋
Your revenue function is dependent only on the number of CDs sold, which you are calling x. The revenue function is 18x and should be set equal to the cost function. Solve for x to reach the break even point.
24000 + 6x = 18x
4000 + x = 3x
4000 = 2x
x = 2000 CDs
You break even when you sell 2000 CDs.
2007-11-26 00:05:46 · answer #2 · answered by hoptown 1 · 0⤊ 0⤋
Rev = 18x - (24000+6x)
Breakeven is when 18x = 24000 + 6x
12x = 24000
x = 2000
so the company had to sell more than 2000 cd each month.
2007-11-26 00:08:17 · answer #3 · answered by norman 7 · 0⤊ 0⤋