Cost is the expense required to reach a goal. The cost is generally made up of two parts - the fixed costs (sometimes called the overhead) and the variable costs. The fixed costs are costs that are incurred regardless of the number of units of a product that are produced. The variable costs are the costs that are directly related to the number of units of a product that are produced.

C(x) = total cost of producing and selling x units = variable costs + fixed costs

Revenue is the entire amount of income from a product before the expenses are paid. Revenue can be found by multiplying the selling price per unit times the number of units sold.

R(x) = (price per unit)(number of units)

Profit is the return received on an investment after all expenses have been met. Profit can be found by subtracting the cost of production from the revenue received from the sale of a product.

P(x) = R(x) - C(x)

The point at which P(x) = 0 is called the break-even point. The break-even point can also be found by letting R(x) = C(x).

Cost, Revenue, and Profit A company produces a product for which the variable cost is $12.30 per unit and the fixed costs are $98,000. The product sells for $17.98. Let x be the number of units produced and sold.

Average Cost The inventor of a new game believes that the variable cost for producing the game is $0.95 per unit and the fixed costs are $6000. The inventor sells each game for $1.69. Let x be the number of games sold.

Cost, Revenue, Profit Let the cost of producing x radios be C(x) = 0.4x² + 7x + 95 dollars. The radios will be sold for $40 each.

HOMEWORK: PAGE 75, 62, 63, 64