# Cost, revenue, and profit functions.

• Sep 23rd 2009, 06:08 PM
kittykat616
Cost, revenue, and profit functions.

"A Company has a fixed cost of \$20,000 and a production cost of \$8 for each unit it manufactures. A unit sells for \$10."

a) What is the cost function?

b) What is the revenue function?

c) What is the profit function?

d) Compute the profit (loss) corresponding to production levels of 7,000, 9,000 and 12,000 units, respectively.

Thanks so much
• Sep 23rd 2009, 06:31 PM
artvandalay11
Cost= Fixed cost + Variable cost

Fixed cost = 20,000 and Variable cost=8*x where x is the number of units you produce

The revenue function is the amount each unit sells for times the amount of units sold, so let y be the number of units sold, we get 10y

The profit function is revenue-cost, (note that I used y in the revenue equation instead of x, because in theory you could produce items and not sell them, but you should probably assume everything that gets produced is then sold, so put x in place on y). Just subtract the functions from the first part

Then just plug those values into the profit function