Question

Pearl's Biking Company manufactures and sells bikes. Each bike costs £40 to make, and the company's fixed costs are £5000. In addition, Pearl knows that the price of each bike comes from the price function P(x) = 300 – 2x where x is the total number of bikes manufactured and sold. Questions a) Find the company's revenue function R(x), the company's cost function C(x) and find the breakeven points

Answer 1

Answer:

R(x) =300·x - 2·x²

C(x) = £5000 + £40 × x

The break even points are 23.47 and 106.53 or 23 and 107 bikes

Step-by-step explanation:

Given that the price function P(x) = 300 -2·x

Cost per bike = £40

The revenue function R(x) is given by  bike price × total number of bikes manufactured and sold

∴ R(x)  = P(x)×x = (300 - 2·x)×x = 300·x - 2·x²

The company's cost function, C(x) is Fixed cost + cost to produce each bike × total number of bikes produced

∴ C(x) = £5000 + £40 × x

The break even point is given by the relation;

Total revenue - total cost = 0

That is, break even point is R(x) - C(x) = 0

300·x - 2·x² - (5000 + 40·x) = 0

-2·x²+260·x-5000 = 0 or 2·x²- 260·x + 5000 = 0

Factorizing, we have;

(x - (65 -5√69))(x - (65 +5√69))

Solving gives x = 23.47 or 106.53

Therefore, the break even points are 23.47 and 106.53.

That is the company is profitable when they produce less than 23 bikes or more than 107 bikes.