Math1313-Section1.4-Blank

Math1313-Section1.4-Blank - R ( x ) C ( x ) < 0...

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Section 1.4 – Break-Even Analysis 1 Section 1.4 Break Even Analysis When a company neither makes a profit nor sustains a loss this is called the break-even level of operation. Note: The break even level of operation is represented by the point of intersection of two lines. The break even level of production means the profit is zero. This means P ( x ) = R ( x ) – C ( x ) = 0, which implies that R ( x ) = C ( x ). y R ( x ) Consider the following graph. 0 y C ( x ) x 0 x The point ( x o , y o ) is referred to as the break even point. x o = break even quantity y o = break even revenue If x < x o then R ( x ) < C ( x ). Hence, P ( x ) =
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Unformatted text preview: R ( x ) C ( x ) &lt; 0 which indicates a LOSS. If x &gt; x o then R ( x ) &gt; C ( x ). Hence, P ( x ) = R ( x ) C ( x ) &gt; 0 which indicates a PROFIT. Example: The XYZ Company has a fixed cost of 200,000, a production cost of $12 for each unit produced and a selling price of $20 for each unit produced. a. Find the break even point for the company. Section 1.4 Break-Even Analysis 2 b. If the company produces and sells 33,000 units, would it have a profit or loss? c. If the company produces and sells 40,000 units, what would be the profit?...
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This note was uploaded on 08/30/2010 for the course MATH Math 1313 taught by Professor Abdelnourahmed-zaid during the Fall '10 term at University of Houston.

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Math1313-Section1.4-Blank - R ( x ) C ( x ) &amp;amp;lt; 0...

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