maths

XYZ company plans to market a new product. based on its market studies, the company estimates that it can sell 5500 units in 2004. the selling price will be $2 per unit. variable costs are estimated to be 40% of the selling price. fixed costs are estimated to be $6000. develop the revanue, cost and profit functions in terms of sales and quantity.

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  1. revenue = units * price/unit
    r = 2x for x units

    var cost = .2r
    fix cost = 6400

    total cost c = 6400 + .2(2x)
    total revenue = 2x

    breakeven when cost = revenue
    2x = 6400 + .4x
    1.6x = 6400
    x = 4000

    so, at 4000 units,

    revenue = 8000
    cost = 6400 + .2(8000) = 8000

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  2. Just use the formula

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