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Expense and Revenue Functions Analysis

The document discusses the financial analysis of two small businesses, Cuik Cuppa Coffee and Orange-U-Happy, focusing on their expense and revenue functions. It includes equations for expenses and revenues based on demand functions, and instructions for graphing these functions to find maximum revenue and breakeven points. Additionally, it outlines methods for finding the roots of revenue equations.

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31 views4 pages

Expense and Revenue Functions Analysis

The document discusses the financial analysis of two small businesses, Cuik Cuppa Coffee and Orange-U-Happy, focusing on their expense and revenue functions. It includes equations for expenses and revenues based on demand functions, and instructions for graphing these functions to find maximum revenue and breakeven points. Additionally, it outlines methods for finding the roots of revenue equations.

Uploaded by

qgc244cz2m
Copyright
© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
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Download as DOCX, PDF, TXT or read online on Scribd

Applications 9-5: Graphs of Expense and Revenue Functions

Money often costs too much.

-Ralph Waldo Emerson, 19th-century American essayist

1. How might the quote apply to what you have learned?

2. Rich and Besty Cuik started a small business. They manufacture a microwavable coffee-to-

go cup called Cuik Cuppa Coffee. It contains spring water and ground coffee beans in a

teabag-like pouch. Each cup costs the company $1.00 to manufacture. The fixed costs for this

product line are $1,500. Rich and Betsy have determined the demand function to be

q = –1,000p + 8,500, where p is the price for each cup.

a. Write the expense equation in terms of the demand, q.

E = 1.00q + 1500

b. Express the expense equation found in part a in terms of the price p.

E = 1.00(-1000p + 8500) + 1500 = -1000p + 8500 + 1500 = -100p +10000

c. Determine a viewing window on a graphing calculator for the expense function. Justify

your answer.
d. Draw and label the graph of the expense function.

e. Write the revenue function in terms of the price. (Remember that R=p ∙ q )

R = p∗q=p ¿

f. Graph the revenue function in a suitable viewing window. What price will yield the

maximum revenue? What is the revenue at that price? Round both answers to the nearest

cent.

g. Graph the revenue and expense functions on the same coordinate plane. Identify the

points of intersection using a graphing calculator. Round your answers to the nearest

cent. Identify the price at the breakeven points.


3. Orange-U-Happy is an orange-scented cleaning product that is manufactured in disposable

cloth pads. Each box of 100 pads costs $5 to manufacture. The fixed costs for Orange-U-

Happy are $40,000. The research development group of the company has determined the

demand function to be q = –500p + 20,000, where p is the price for each box.

a. Write the expense equation in terms of the demand, q.

b. Express the expense function in terms of the price, p.

c. Determine a viewing window on a graphing calculator for the expense function. Justify

your answer.

d. Draw and label the graph of the expense function.

e. Write the revenue function in terms of the price.

f. Graph the revenue function in a suitable viewing window. What price will yield the

maximum revenue? What is the revenue at that price? Round answers to the nearest cent.

g. Graph the revenue and expense functions on the same coordinate plane. Identify the

points of intersection using a graphing calculator and name the breakeven points. Round

to the nearest cent. Identify the price at the breakeven points.


4. Use any method you want to find the roots of each equation.

a. R=−250 p 2+ 20,000 p

O= ( p )(−250 p+20000 )

b. R=−520 p 2+67,600 p

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