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P(x) = 12x - 100, Total Revenue











































the formula P(x)=12x-100, describe the meaning of the number 12 and the meaning of the number-100 in the formula, in terms of its meaning in relation to the profit.

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Sep 12, 2011
Equation for Profit
by: Staff


The question:

the formula P(x)=12x-100, describe the meaning of the number 12 and the meaning of the number-100 in the formula, in terms of its meaning in relation to the profit.


The answer:

Profit = Total Revenue - Total Cost

P(x) = Total Revenue - Total Cost

P(x) = 12x - 100

Total Revenue = 12x

x = number of units sold

Total Cost = 100


1. describe the meaning of the number 12 in the formula

The number 12 represents the revenue received for each unit sold


2. meaning of the number -100 in the formula

-100 stands for the fixed cost

(The fixed cost could be the cost of renting a facility, or monthly salaries, for example.

Regardless of the number of units sold, the fixed cost does not go up or down. If 5,000 units are sold, the fixed cost is still 100. If no units are sold, the fixed cost is still 100.)


Although you did not ask, the next question could be: How many units must be sold before the business becomes profitable?

P(x) = 12x – 100

Break-even volume

0 = 12x - 100

0 + 100 = 12x - 100 + 100

0 + 100 = 12x + 0

100 = 12x

100/12 = 12x/12

100/12 = x * (12/12)


8.33333 = x * (1)

8.33333 = x

x = 8 ⅓

the business will be profitable when the sales volume exceeds 8 ⅓ units



Thanks for writing.

Staff
www.solving-math-problems.com



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