Answer:
<em>Their total sales (revenue) when they break-even is $250,000</em>
Step-by-step explanation:
<u>Linear Modeling</u>
Some situations can be mathematically represented as linear functions. If we are in a situation where a linear model is suitable, then we need two independent data to build it up.
The linear function can be expressed in the slope-intercept format:
y = mx + b
Where m and b are constant values.
The total cost function for Rally Co.'s to produce x toy trucks is:
C(x) = 200,000 + 4x
Given they sell each truck for $20, the revenue function is:
R(x)= 20x
The break-even condition is when the costs and the revenue are equal:
20x = 200,000 + 4x
Subtracting 4x:
16x = 200,000
Dividing by 16:
x = 200,000/16
x = 12,500 toy trucks
The revenue at this production level is:
R(x)= 20*12,500=250,000
Their total sales (revenue) when they break-even is $250,000
