Applications of equation in Business & Economic

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Presentation transcript:

Applications of equation in Business & Economic Baniyas International Private School Mathematics Department Applications of equation in Business & Economic For Grades 11 and 12

Applications of equation in Business & Economic TR = P X Q Total Revenue equation Total Revenue equation= selling price X number of units

Applications of equation in Business & Economic Exercise: What is The equation of total revenue when the price is equal 40 ?

Applications of equation in Business & Economic Exercise: What is The equation of total revenue when the price is equal 40 ? TR = 40 Q

Applications of equation in Business & Economic Total Cost equation . We have tow types of costs . 1. Fixed costs. 2. variable costs. Fixed cost:- like rents, advertising , marginal salaries. Variable costs :- like sales commissions, raw materials . Total variable cost = variable cost per unit X number of unites so, TVC= Vc per unit X Q . Total costs = Total variable cost + fixed cost TC = FC + TVC TC = FC + Vc per unit X Q

Applications of equation in Business & Economic Example: The fixed costs Fc= 2000 Dhs and the unit variable costs is 10.2 Dhs. Write the total cost equation

Applications of equation in Business & Economic Example: The fixed costs Fc= 2000 Dhs and the unit variable costs is 10.2 Dhs. Write the total cost equation Answer: TC = FC + Vc per unit X Q, Since Fc = 2000 Dhs and Vc per unit = 10.2 Dhs. Then TC = 2000 + 10.2 Q

Break Even Point(BEP) BEP is a situation in the business activity where T R = TC That mean no profit nor loss is made in the business

Finding the break even Example: Sata Enterprises makes shoes. The variable cost to make each pair of shoes is 90 Dhs, fixed cost is 3900 Dhs, the selling price is 150 Dhs per pair. The factory's production capacity for the period is 200 pairs of shoes. Answer the following:- 1. Write the total revenue equation and the total cost equation . Calculate the break even point. What is the percentages of the QBEP out of the capacity.

Finding the break even Example: Sata Enterprises makes shoes. The variable cost to make each pair of shoes is 90 Dhs, fixed cost is 3900 Dhs, the selling price is 150 Dhs per pair. The factory's production capacity for the period is 200 pairs of shoes. Answer the following:- 1. Write the total revenue equation and the total cost equation . Calculate the break even point. What is the percentages of the QBEP out of the capacity. Solution: TR = 150 Q TC= TVC + FC Since TVC= 90 Q ,then TC = 90 Q + 3900

2. We can find the break –even point algebraically by TC = TR 90 Q + 3900 = 150 Q 60 Q = 3900 Q BEP = 3900/60 = 65 Units when Q = 65 then TC = TR So TR = 150 (65) = 9750 Dhs. So the break – even point ( 65 Units, 9750 Dhs ). 3. Q BEP % = Q BEP X 100 = 65 X 100 = 32.5% Capacity 200

Total Income Total Income = Fixed Income + C% × Sales Revenue TI = FI + C% × SR .

Total Income Example:- A sales agent with monthly salary of 2500 Dhs gets 5% commission on the sales revenue . Answer the following:- Write the monthly total Income of the agent in terms of sales revenue. What is the total income if the sales revenue is 50000 Dhs . If the commission rate is changed, what is the commission percentage if the total income is 9500 Dhs when the sales revenue is 70000 Dhs.

Solution Since FI = 2500 Dhs , C% = 0.05 ,then TI = 2500 + 0.05 SR . 1. TI = FI + C% × SR . Since FI = 2500 Dhs , C% = 0.05 ,then TI = 2500 + 0.05 SR . TI ( at SR = 50000 Dhs) = 2500 + 0.05 × 50000 = 5000 Dhs. TI = FI + C% × SR , Since TI = 9500 Dhs ,FI = 2500 Dhs ,SR = 70000 Dhs ,then 9500 = 2500+ 70000 C% , C% = 0.1 or 10%

Find the break – even point algebraically. Exercise : (1) A company in Dubai makes watches. The selling price of a watch is 150 dhs , the unit variable cost is 90 Dhs. Fixed costs for the period are 1800 Dhs the capacity of production is 100 . Find the break – even point algebraically.

Formulas to memorize 1.Total revenue =………………….. 2.Total Cost =……………………… 3. At Break Even Point , …….. = ………. . 4. At Market equilibrium , ………. = ………. . 5. Total income = ………………………….. .