Question

A small business produces and sells balls. The fixed costs are $20 and each ball costs $4.32 to produce. Each ball sells for $8.32. Write the equations for the total cost, C, and the revenue, R, then use the graphing method to determine how many balls must be sold to break even.

Answer 1

Part 1:

Fixed Cost, f = $20

number of balls = n

Cost of each ball, c = 4.32

Price of each ball, p = 8.32

Equation for total cost:

Total Cost of balls will come by adding the cost of all balls and the fixed cost

Total Cost = number of balls made × Cost of each ball + fixed cost

C = 4.32n + 20

Equation for revenue:

Revenue = Number of balls made × price of each ball

R = 8.32n

Part 2:

Use the graphing method to determine how many balls must be sold to break even

Breakeven means Revenue = total Cost

This happens at a point (5,41.6) where n = 5 is the number of balls sold

and C = 41.6 is the total cost

When 5 balls are sold there will be breakeven

R = 4n - 20

C = 4.32n + 20

Red line represent Cost

Black line represent Revenue