A small company manufactures a certain product. The price-production relationship for this product is P = -0.7*D + 300, where P is the unit sales price of the product and D is the annual production (number of units produced). Suppose variable costs are $25 per unit produced and fixed costs are $10,287 . Find the break even point (minimum number of units that must be produced for a business to become profitable). Note: there are 2 roots in the breakeven equation, choose the smallest root.

Respuesta :

Answer:42 units

Explanation:

Given

Price-production relationship=-0.7D+300

Total cost=Fixed cost+ variable cost

Total cost=10,287+25D

where D is the units produced

Total revenue[tex]=\left ( -0.7D+300\right )D[/tex]

Total revenue[tex]=-0.7D^2+300D[/tex]

For Break even point

Total revenue=Total cost

[tex]10,287+25D=-0.7D^2+300D[/tex]

[tex]7D^2-2750D+102870=0[/tex]

[tex]D=\frac{2750\pm \sqrt{2750^2-4\times 7\times 102870}}{2\times 7}[/tex]

[tex]D=41.869\approx 42[/tex] units