You just got a free ticket for a boat ride, and you can bring along 3 friends! Unfortunately, you have 5 friends
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Given:
Investment on equipment = $98,000
Cost of each unit = $12.20
Selling price of each unit = $16.98.
To find:
(a) The total cost C as a function of x.
(b) The revenue R as a function of x.
(c) The profit P as a function of x.
Solution:
Let x be the number of units produced and sold.
We have,
Fixed cost = $98,000
Variable cost = $12.20x
Total cost = Fixed cost + Variable cost
Therefore, the cost function is .
Selling price of each unit = Revenue from each unit = $16.98.
Total revenue = Revenue from x units
Therefore, the revenue function is .
Profit = Revenue - Cost
Therefore, the profit function is .