lesson 2 VIDEO 5 Business Math: Cost, Revenue, and Profit Analysis

Vocabulary based on Lesson 4, Video 3, regarding the application of linear functions to determine cost, revenue, and profit for a helmet manufacturer.

Fixed Cost

The overhead costs that remain constant regardless of the number of items produced, which for Extreme Protection Incorporated is $6,600$ per month.

Variable Cost

The cost that changes based on the number of units produced ($m x$), consisting of materials and labor which totals $35$ per helmet in this scenario.

Total Cost Function ($c(x)$)

The sum of variable costs and fixed costs, represented as $c(x) = 35x + 6,600$.

Revenue Function ($r(x)$)

The total money generated from sales, represented as the price per unit ($n$) times the number of units sold ($x$), expressed as $r(x) = 60x$.

Profit Function ($p(x)$)

The function derived by subtracting the total cost from total revenue ($p(x) = r(x) - c(x)$), which simplifies to $p(x) = 25x - 6,600$ in this lesson.

Marginal Profit

The additional profit earned from selling one more unit, which is equal to the constant slope of the profit function ($25$).

Variable Revenue

The income gained per unit sold ($n x$); for this model, the company receives $60$ for each helmet sold to dealers.