Module 4: Worded Problem

I. Break-Even Point Analysis: Linear Functions

Break-Even Point (BEP)

The common point between the total revenue and the total cost is called the break-even point.
At this point the total revenue equals the total Cost. The company has no profit and has
no loss.

Total Revenue, Total Cost and Profit Functions

The total revenue (TR) is obtained by finding the product of the selling price per unit by the number of
units sold. Total Cost (TC) is obtained by finding the sum of the fixed cost (FC) and variable cost (VC).
Fixed cost is constant while the variable cost represents the cost of production per unit. The following
formulas should be remembered:

TR = selling price times the number of units sold

TC = FC + VC (where VC = cost per unit times the number of units)
Profit = TR – TC

At break-even point, TR = TC or TR – TC = 0 Profit = 0

Break-Even Analysis: Linear Function

Example:
A firm sells its products at P6 per unit. The product has a variable cost of P3 per unit and the
Company’s fixed cost is P9,000.00. Determine each of the following:

1. TR, TC and profit functions

2. Sales volume when profit is P9,000
3. Profit when sales are 600 units
4. The break-even quantity and revenue
5. The amount by which the variable cost per unit has to be decreased or increased for the firm to
break-even at 2,000 units. Assume that the selling price and fixed cost remain constant.
6. The new selling price per unit in order to break-even at 300 units, assuming the FC and VC
remain constant.
7. Number of units to sell to cover the fixed cost.

Solution:

Let x = number of units to sell

VC = 3x
VC = cost per unit times the number of units
1. TR = 6x
TC = FC+ VC
Profit = TR – TC
= 6x – (3x + 9000)
 = 6x -3x – 9000
P = 3x – 9000

2. If P = P9000, in P = 3x – 9000
Profit = 3x – 9000
P9,000 = 3x – 9000
-3x = -9000 – 9000
-3x = - 18,000
X = -18,000/-3
X = 6,000 units
3. If x = 600 units
P = 3x – 9000
P = 3(600) – 9000
= 1800 – 9000
P = -7200 (loss)
4. At break-even:
TR = TC
6x =3x + 9000
6x – 3x = 9000
3x = 9000
X = 9000/3
X = 3000 (BEP) quantity
To find revenue:
TR = 6x
= 6(3000) = P18,000 (BEP) revenue
5. Let y = the new VC per unit. To break –even at 2000 units, since VC = cost per unit times the
number of units sold

New VC = 2000y; TC = VC + FC
Original TC = 3x + 9000
New TC = 2000y + 9000
At BEP: TR = TC
6(2000) = 2000y + 9000
12,000 = 2000y + 9000
-2000Y = 9000 – 12000
- 2000Y = -3000
Y = -3000/-2000
Y = P1.50 new variable cost per unit
Since old VC is P3.00/unit, decrease therefore is P1.50 per unit.
6. Let y = new selling price per unit
Number of units is 300
New TR = 300y; TC = 3x + 9000
At break-even, TR = TC
300y = 3(300) + 9000
Y = P33.00 new selling price, to break-even at 300 units
7. To cover the fixed cost, TR = FC
 6x = 9000
X = 9000/6
X = 1,500 units to sell to cover the fixed cost

Activity 16

Solve the following problems. (5 points each)

1. Consider a firm that buys units for P10.00 and sells for P15.00. There are no other variable cost.
Fixed cost are at P6,000.00. Use the break-even formula to determine the following:

a. TR, TC and profit functions.

b. Sales volume when profit is P8,000.
c. Profit when sales are 5oo units.
d. The break-even quantity and revenue.
e. The amount by which the variable cost per unit has to be decreased or increased in order to
break-even at 500 units. (Selling price and FC remain constant).
f. The new fixed cost in order to break-even at 800 units. Selling price and variable cost
remain constant.
g. The new selling price per unit, to break-even at 500 units, if VC and FC are constant.

2. A business firm produces and sells a particular product. Variable cost is P30.00 per unit. Selling
price is P40 per unit. Fixed cost is P60,000. Determine the following:
a. Profit when sales are 10,000 units.
b. The break-even point quantity and revenue.
c. Ales when profit are at P9,000.
d. The amount by which fixed cost will have to be decreased or increased, to allow the firm to
break-even at sales volume of 500 units. VC and selling price per unit remain the same.
e. The volume of sales to cover the fixed cost.
f. Suppose that the firm wants to break-even at a lower number of units, assuming that FC
and VC remain constant, how is the selling price affected?

II. Break-Even Analysis: Non-Linear Functions

To increase or maximize the profit, it is a common belief that an increase in production

would increase the profit. This is however not true in general, for as the market becomes
saturated with the product, we cannot expect to continue selling it at its original price. The
price should be decreased therefore and the decrease sometimes depends on the number of
units to purchase by the customer.

Example:

A product sells at P12.00 per unit. Fixed cost is P40.00 and the variable cost per unit is
P7.00. After observing that the sale of the product has begun to deline, its per unit selling price
is decreased by 10% of units sold. Variable cost and fixed cost remain unchanged.
 Let x = number of units sold
a. New selling price = (12 - .1x) per unit
b. TR = (12 - .1x)x
TR = 12x - .1x2
TC = 7x + 40
Since P = TR –TC
P = (12x - .1x2) – (7x + 40)
P = 12x - .1x2 – 7x – 40
P = 5x - .1x2 – 40 or P = .1x2 + 5x – 40
c. At break-even point, Profit = 0
0 = 5x - .1x2 – 40
-.1x2 + 5x – 40 = 0 -.1 = -1/10
2
X – 50x + 400 = 0 multiplying the equation by -10
(x – 10)(x – 40)= 0 factoring the quadratic trinomial
Equating both factors to zero, and solving for x:

X – 10 = 0 x – 40 = 0
X = 10 break-even quantity x = 40 break-even quantity
Solving for the break-even revenues:

If x = 10 If x = 40
TR = 12x - .1x2 TR = 12x - .1x2
TR = 12(10) - .1(10)2 TR = 12(40) - .1(40)2
TR = 120 – 10 TR = 480 - 160
TR = 110 break-even revenue TR = 320 break-even revenue

Therefore, there are two break-even points: (10, 110) and (40, 320). This means that the selling
less than 10 units as well as more than 40 units would mean a loss for the company. We can show this
by substituting values in the profit functions, such as x= 9 and x = 41.

d. P = .1x2 + 5x – 40
If x = 50
P = .1(50)2 + 5(50) – 40
P = -.1(2500) + 250 – 40
P = - P40.00 loss

Activity 17

Find the break-even quantities: ( 5 points each)

1. P = -.09x2 + 2.4 x – 6
2. P = -.1x2 + 4x – 10
3. P = -.5x2 + 40x - 740

III. Worded Problem

 Many problems which are stated in words have to be translated into mathematical symbols
before they can be solved. All answers should be checked by testing them in the original worded
problem.

Example 1:

How many pounds of water must be evaporated from 50 pounds of 3 per cent salt solution so
that the remaining solution will be 5 per cent salt?

Solution:
Let x = the number of pounds of water which must be evaporated
.03 x 50 = the number of pounds of salt in the solution
50 – x = the number of pounds of solution remaining and the amount of salt be unchanged

Since 5 per cent of the solution will now be salt, we have

.05(50 – x) = .03 x 50
a. - .05x = 1. 5
.05x = 1.5 – 2.5
x = 1/,05
x = 20
That is, 20 pounds of water must be evaporated.
Check: If 20 pounds of water are evaporated, the number of pounds of solution remaining will
be 50 -20 = 30, of which 5 per cent must be salt. But .05 x 20 = 1.5, which is the actual number of
pounds of salt.

Example 2:

Two airplanes left airports which are 600 miles apart and flew toward each other. One plane
flew 20 miles per hour faster than the other. If they passed each other at the end of an hour and 12
minutes, what were their rates?

Solution:
Let x be the rate, in miles per hour of the slower plane
x + 20 will be the rate of the faster plane than the other
an hour and 12 minutes = 1 and 1/5 hours = 1 1/5 hours
1 1/5x + 1 1/5(x 20) the total distance that they flew

1 1/5x + 1 1/5(x + 20) = 600

6/5x + 6/5x + (5/6 . 20) = 600
12/5x + 24 = 600
12/5x = 600 – 24
12/5 x = 576
12x = (576)(5)
12x = 2880
x = 2880/12
x = 240
x + 20 = 260
 That is, the rates of the two planes were 240 miles per hour and 260 miles per hour respectively.

Check:

The distance that the slower plane flew was 1 1/5 x 240 miles or 288 miles; the distance that the
faster plane flew was 1 1/5 x 260, or 312 miles. The sum of these distances is 288 + 312 = 600 miles.

Many worded problems lead to linear equations, as was seen in the study of linear equations in
one unknown. Obviously there is no mechanical method which can be used for setting up the equations
for all such problems. Each problem must be clearly understood and the various statements must then
be translated into mathematical equations. However, for certain problems involving mixtures, rates of
motion, rates of interest, etc., a tabular arrangement such as the one used in the following illustrative
example may be of assistance in determining the equations whose solution gives the answer to the
problem.

Example3:

A seed company wishes to use bluegrass seed seedling at $1.30 per pound and clover seed
selling at $1.80 per pound to make 100 pounds of mixture to sell at $3.38 per pound. How much of each
kind of seed must be used?

No. of pound X Price per Pound = total

price
Bluegrass x 1.30 1.30x
Clover y 1.80 1.80y
Mixture 100 1.38 138

x + y = 100;
1.30x + 1.80y = 138
1.30(x +y = 100) Solve by simultaneous equation or elimination
1.30x + 1.80y = 138

1.30x + 1.30y = 130

1.30x + 1.80y = 138 by subtraction
- 0 5y = - 8
y = -8/-0.5
y = 16

x + y = 100
x + 16 = 100
x = 100 – 16
x = 84

That is, 84 pounds of bluegrass seed and 16 pounds of clover seeds must be used
Example 4:

Two pipes running simultaneously can fill a tank in 2 hours and 40 minutes. After the larger pipe
had run for 3 hours the smaller pipe was also turned on and the tank was full 40 minutes later. How
long would it takes each pipe alone to fill the tank?

Solution:

Let x = the number of hours it would take the larger pipe to fill the tank
Let y = the number of hours it would take the smaller pipe
1/x = the part of the tank that the larger pipe can fill I 1 hour
1/y = the part of the tank that the smaller pipe can fill in 1 hour

Since the two pipes running simultaneously can fill the tank in 2 40/60 hours or 2 2/3 hours, the part of
the tank that they can fill in 1 hour is:

1/ 2 2/3 = 1/ 8/3 = 3/8

The part of the tank that the larger pipe fills in 3 hours is 3/x, and the part that both pipes fill in
40 minutes is 40/60 = 2/3 . 3/8 = ¼. Therefore;

3/x + 1/4 = 1 1/x + 1/y = 3/8

4x( 3/x + ¼ = 1) ¼ + 1/y = 3/8
12 + x = 4x 8y(1/4 + 1/y) = 3/8)
x – 4x = -12 2y + 8 = 3y
-3x = -12 2y – 3y= -8
x = -12/-3 y = -8/-1
x=4 y=4
That is, it will take the larger pipe 4 hours and the smaller pipe 8 hours to fill the tank.

Activity 18:
Solve the following problems. ( 5 points each )

1. One number is 17 less than another; their sum is 125. What are the numbers?
2. Find three consecutive integers whose sum is 378.
3. The length of a rectangle is 13 inches greater than its width. Is perimeter is 8 feet. Find its
dimensions.
4. How much water must be added to 200 gallons of mixture which is 80 per cent alcohol to
reduce it to a 75 per cent mixture?
5. How much coffee costing 85 cent a pound must be added to 15 pounds costing 90 cents a
pound to make a mixture costing 87 cents a pound?

Activity 19:

Find the following problems. ( 5 points each)

 1. A man walks a certain distance at the rate of 5 miles an hour. If the total time that it takes him
in 3 hours and 9 minutes, what is the total distance that he walks?
2. Two pipes running simultaneously can fill a swimming pool in 6 hours. If both pipes run foe 3
hours and the first is then shut off, it requires 4 hours more for the second to fill the pool. How
long does it take each pipe running separately to fill the pool?
3. An airplane flew in a direct line from its base at the rate of 300 miles an hour and returned over
the same route at the rate of 250 miles an hour. Requiring 15 minutes longer on the return trip.
How far from its base did it fly?
4. A candy manufacturer has two grades a candy, selling at 75 cents and 90 cents a pound
respectively. How many pounds of each must he use to make a mixture of 150 pounds to sell at
78 cents a pound? A fruit dealer sold 9 dozens lemons and 1 dozens oranges for $17.40. The
following day he sold, at the same price, 11 dozens lemons and 20 dozens oranges for $21.60.
Find the prices of his lemons and oranges.
5. An airplane made a trip of 350 miles against the wind in an hour and 10 minutes. Returning
with the wind it took only one hour. Find the speed f the plane in still air and the rate of the
wind?

References:

Mathematics in the Modern World

Quantitative Techniques for Business Management
College Algebra
Calculus with analytic geometry for business and economics

MATHEMATICS IN THE MODERM WORLD

Prelim Examination
Second Semester, S/Y 2021 – 2022

Name_____________________________________________________Date________-Score_______
 I. TRUE OR FALSE: Write T if the statement is correct and F if the stamen is not correct.
Correct minus wrong. (one point each)

______1. To add two numbers having like sign, the sign of the answer is always positive.
______2. To add two numbers having u like sign, the sign of the answer is always negative.
______3. To subtract two numbers, always change the sign of the subtrahend and proceed to addition.
______4. To add two numbers having unlike signs, subtract the lesser number from the greater number
and copy the sign of the greater number as the sign of the answer.

______5. To multiply two numbers having like sign, the sign of the answer is always positive.
______6. To multiply two numbers having unlike signs, the sign of the answer is always negative.
______7. In dividing numbers having unlike signs, the answer is positive.
______8. Terms having the same numerical coefficient are called similar terms.
______9. Terms having the same literal coefficient are called similar terms.
_____10. Factors are numbers that being multiplied.

II. Perform the indicated operation. (2 points each)

1. 10 – (9) – (-3) – 20 = 2. 6(-1) – (2)3 =

2. 10 – (10 ÷ 2) + (-5)(2) = 4. -7 (-1)3 + 10 – (-2) 4 =

5.9 + (-8) – (-9) + 9 =

III. Simplify each of the following expression. (2 points each)

1. 5c -3d + 7c + 2d = 4. x(x3 + x2 + x + 1) – (x3 +x2 + x + 1) =

2. 8xy – 9y – 10xy = 5. 15x2 -6x (x – 2) – x (5 + 10x) =

3. –(8cd -4ab) – 20cd + 5ab =

IV. Find each of the following products. (2 points each)

1. (3x + 4)(6x + 1) = 4. (.3x2 – ½)(.3x2 + 1) =

2. (4m – a) (4a + a) = 5. (1/2a + 3)(1/2a – 3) =

3. (2/3x – ½)(2/3x + 1) =

V. Find the factors of each of the following. (2 points each)

1. 9ax -6x2ay 3ax3 = 4. (a + b)2 –(c – d)2 =

2. 8x2y2 – 40 xy + 80x2 = 5. X2 + x – 12 =

3. 9x2 + 6x + 1 =

VI. Factor each expression by grouping. ( 2 points each)

1. 2ax – 4ax – 2by + 2bx = 4. x2 – 2x + 1 – y2 =

2. Y3 -2y2 + 5y – 10 = 5. 9x2- y2 + 9y -9 =

3. xy3 + 2y2 –xy -2 =