Question
The selling price for a product is given by p = -$100-0.0017S, where P is the selling price and S is the sales volume. Revenue
The selling price for a product is given by p = -$100-0.0017S, where P is the selling price and S is the sales volume. Revenue equals price times quantity. The price will require purchase of a machine that will cost $500,000 and will last for 5 years. The company wants to learn 18% on its money. The estimated variable cost of the product is variable cost = 4S+0.005S^2 . 1)Calculate the break even point (S) for this product? 2) Determine the sales volume that maximizes profit? 3) Sketch a graph showing the revenue and total cost lines and the break-even points?
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