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

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

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

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

5. Applications of equation in Business & Economic
Total Cost equation . We have tow types of costs .
1. Fixed costs 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

6. 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

7. 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 = Q

8. 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

9. 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.

10. 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

11. 2. We can find the break –even point algebraically by TC = TR
90 Q = 150 Q
60 Q = 3900
Q BEP = 3900/60 = 65 Units
when Q = 65 then TC = TR
So TR = (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

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

13. 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 Dhs .
If the commission rate is changed, what is the commission percentage if the total income is 9500 Dhs when the sales revenue is Dhs.

14. 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 = SR .
TI ( at SR = Dhs) = × = 5000 Dhs.
TI = FI + C% × SR ,
Since TI = 9500 Dhs ,FI = 2500 Dhs ,SR = Dhs ,then
9500 = C% , C% = 0.1 or 10%

15. 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.

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