1313_section1o4_after

1313_section1o4_after - R ( x ) – C ( x ) < 0 which...

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Section 1.4 – Break-Even Analysis 1 Section 1.4 Point of Intersection Any two lines that are not parallel intersect at exactly one point. To find the point of intersection, we need to solve the system. Example 1: Find the point of intersection. a. 2 4 2 5 2 - = - = - y x y x b. x y - = 4 2 13 6 3 = + y x
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Section 1.4 – Break-Even Analysis 2 c. 3 2 = - y x 6 4 2 - = x y
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2 Section 1.4 Part 2 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 ) < 0 which indicates a LOSS. If x > x o then R ( x ) > C ( x ). Hence, P ( x ) = R ( x ) – C ( x ) > 0 which indicates a PROFIT. 3 Example: If 200 4 ) ( + = x x C and x x R 6 ) ( = , what is the break even point? Example: If the profit function to produce x items is 600 12 ) (-= x x P , what is the break even point? 4 Example 1: Find the break-even quantity and break-even revenue if ( ) 40 44,000 C x x = + and x x R 150 ) ( = . 5 Example 2: 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. b. If the company produces and sells 28,000 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 02/21/2012 for the course MATH 1313 taught by Professor Constante during the Spring '08 term at University of Houston.

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1313_section1o4_after - R ( x ) – C ( x ) < 0 which...

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