Break-even analysis. A company markets exercise DVDs that sell for $ 19.95 , including shipping and handling. The monthly fixed costs (advertising, rent, etc.) are $ 24 , 000 and the variable costs (materials, shipping, etc) are $ 7.45 per DVD. (A) Find the cost equation and the revenue equation. (B) How many DVDs must be sold each month for the company to break even? (C) Graph the cost and revenue equations in the same coordinate system and show the break-even point. Interpret the regions between the lines to the left and to the right of the break-even point.
Break-even analysis. A company markets exercise DVDs that sell for $ 19.95 , including shipping and handling. The monthly fixed costs (advertising, rent, etc.) are $ 24 , 000 and the variable costs (materials, shipping, etc) are $ 7.45 per DVD. (A) Find the cost equation and the revenue equation. (B) How many DVDs must be sold each month for the company to break even? (C) Graph the cost and revenue equations in the same coordinate system and show the break-even point. Interpret the regions between the lines to the left and to the right of the break-even point.
Solution Summary: The author calculates the cost equation and revenue equation for the sale of DVDs of a company.
Break-even analysis. A company markets exercise DVDs that sell for
$
19.95
,
including shipping and handling. The monthly fixed costs (advertising, rent, etc.) are
$
24
,
000
and the variable costs (materials, shipping, etc) are
$
7.45
per DVD.
(A) Find the cost equation and the revenue equation.
(B) How many DVDs must be sold each month for the company to break even?
(C) Graph the cost and revenue equations in the same coordinate system and show the break-even point. Interpret the regions between the lines to the left and to the right of the break-even point.
System that uses coordinates to uniquely determine the position of points. The most common coordinate system is the Cartesian system, where points are given by distance along a horizontal x-axis and vertical y-axis from the origin. A polar coordinate system locates a point by its direction relative to a reference direction and its distance from a given point. In three dimensions, it leads to cylindrical and spherical coordinates.
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