1
MA 15200
Lesson 33, Section 5.1 (part 2)
This is the first of two lessons of applied problems using a system of linear equations
(linear system).
I
BreakEven Analysis
The
Revenue
of a company is the money generated by sells of the product.
The
Cost
to
a company is the sum of any fixed costs and the cost of producing the product.
If a company produces and sells
x
number of a product, its
Revenue Function and Cost
Function
are represented by
( )
(price per unit)
( )
fixed cost + (cost per unit)
y
R x
x
y
C x
x
=
=
=
=
These are both linear functions.
In the revenue function, the price per unit is the slope.
In the cost function, the cost per unit is the slope.
When graphed, these lines will
intersect.
The
point of intersection
is called the
breakeven point
.
The
x
coordinate
will be the number of units of the product and the
y
coordinate will be the amount of
money coming in from sells and
the amount of money going out for costs.
Ex 1:
A manufacturer of CDs have determined that monthly fixed costs to make the
CDs are $337,500.
It costs $3.50 to make a CD. Each CD that is made can be
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 Fall '09
 Linear Equations, Equations, revenue function

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