Business Applications 1) To determine the total cost of production, an economist

Question

Business Applications

1) To determine the total cost of production, an economistuses the equation

T = U•N + F, where T is the total cost,U is the unit cost, N is the number of unitsmade, and F is the fixed cost. Use this equation tofind the number of units made during a month when the total costwas $9,000, the unit cost was $25, and the fixed cost was$3,000.

2) To determine the break-even point, or the number ofunites that must be sold so that no profit or loss occurs, aneconomist uses the formula Px = Cx + F, where Pis the selling price per unit, x is the number of unitsthat must be sold to break-even, C is the cost to makeeach unit, and F is the fixed cost. A businessanalyst has determined that the selling price per unit for a laserprinter is $1,600. The cost to make one laser printer is $950,and the fixed cost is $211,250. Find the break-even point.

Explanation / Answer

T=U*N+F just plug in the numbers and solve ($9,000)=($25)*N+($3,000) you want to isolate the unknown, N, always start with lowest orderof operations, + and - So subtract $3000 from each side. ($9,000)-($3000) = 25*N+($3000) -($3000) $6000=$25*N then divide each side by 25 to isolate N. $6000/$25=$25*N /$25 240=N Same with the second part. Px=Cx+F ($1,600)x=($950)x+($211,250) This time there are two x's, we want them on the same side, so wesubtract 950x from both sides. ($1,600)x -($950)x =($950)x-($950)x+($211,250) ($650)x =($211,250) Now we want to isolate x by dividing each side by 650. ($650)x/($650) =($211,250)/($650) x=325 If you need any other explanation or help, feel free to contact me,I'll do the best I can.

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