Cost-Benefit Analysis – Linear Equations
Residence A there are 1720 canned drinks consumed per week. In another
residence, Residence B, there are 260 students who consume 1480 canned drinks
per week.
a.Calculate the linear function (equation) if drink
consumption is a linear function of the number of students.
b.Calculate the number of canned drinks required to stock
Residence C per week knowing that the number of students in Residence C is 600.
The XYZ Company can sell 10,000 units of steel for $500,000.
The cost of these units is $600,000. The company can sell 25,000 units for
$1,250,000 and these cost $1,050,000. Assuming there is a linear relationship
between these variables:
a.Find the revenue, cost and profit functions.
b.Find the breakeven point and graph the revenue and cost
functions for 0 ≤ X ≤ 30000.
An auto parts company requires a large number of gaskets
which they currently buy for .50 each. A recent feasibility study has indicated
that if they produced them internally, their annual fixed costs (loan payments
on equipment, equipment maintenance, etc.) would total $10,000 and the material
and labour costs would be .40 per gasket.
a.They currently require 70,000 gaskets per year. Should
they begin to produce their own gaskets? Explain.
b.They estimate their gasket requirements will increase by
10,000 a year. In how much time will it become profitable to manufacture the
gaskets internally assuming that the costs remain the same.





