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Thread: Complicated math problem on finance.

  1. #1

    Complicated math problem on finance.

    George want to start a business manufacturing his latest invention, widgets. It costs $30,000 in lawyer fees(initial cost) to patent his invention and $5,000 for a license to manufacture products in Newport Beach(initial cost).

    Manufacturing of each widget includes the following costs: $70 for materials(manufacturing costs), and $30 for manufacturing labor(manufacturing costs). George must also pay his salesman 10% of the purchase price as a commission for each widget sold(sales costs). George is able to sell the widgets to consumers for $2,000 each.

    1)Write the formula that describes George's PROFIT(P) as a function of the number of widgets sold(N)

    2)Create a graph that describes the function that includes his break even point.

    3)Use the graph to determine how many widgets he must sell in order to break even.

    4)If George sells 50 widgets per month(starting the first month he is open for business), how many days will it take for him to make 1,000,000 in profit? Show your work.

    5)State whether you think it is a good investment for George's money. You must then explain/defend your opinion.

    6)What is the simple rate of return on George's investment(initial costs) after 1 year? Show your work.

    *Profit+(sales price per widget-total manufacturing costs per widget)*(# of widgets sold)-(initial costs)
    *Round # of widgets to the nearest whole number.
    *Assume 30 days in a month

  2. #2
    well its easy to tell he makes 1700 per item he sells. so 1700x>=30,000 so he would need 18 of them to break even. x=30,000/(2000-10%-70-30) the graph would be a straight like make it equal y=17000x and then y=30,000 not sure how you would determine where they cross for the 50 you just times 1700 by 50 and im guessing divide that by 100,000 then by 30 of course its a good investment he's make 1700 of everyone he sells

  3. #3
    Elite Member
    Join Date
    Feb 2004
    Ottawa, Ontario
    Hmmm...kind of a silly problem; in only one month: 1700 * 50 = $85,000;
    after TOTAL "let's go costs!" of $35,000 !

    You sure you got that typed right, Leo?
    I'm just an imagination of your figment !

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