Linear Programming There is a fixed cost of 50000 to start a

Linear Programming

There is a fixed cost of $50,000 to start a production process. Once the process has begun, the variable cost per unit is $25. The revenue per unit is projected to be $45.

a) Write an expression for total cost.

b) Write an expression for total revenue.

c) Write an expression for total profit.

d) Find the breakeven point.

Solution

Let the no of units be x

Total Cost = 25X+50000

Total Revenue = 45X

Total Profit (45-25)x-50000

Break Even Point = Fixed Cost/ Contribution per unit

Contribution per unit = 45-25 = $ 20

Break Even Point = 50000/20 = 2500 units