Solve the problem.
-A firm is considering a new product. The accounting department estimates that the total cost, C(x), of produx units will beC(x)= 60x + 3,680.The sales department estimates that the revenue, R(x), from selling x units will beR(x)= 70x,but that no more than 485 units can be sold at that price. Find and interpret (R -C)(485).
A)$1,170 profit, income exceeds cost It is worth it to develop product.
B)-$1,170 loss, cost exceeds income It is not worth it to develop product.
C)$66,730 profit, income exceeds cost It is worth it to develop product.
D)$853 profit, income exceeds cost It is worth it to develop product.

Question

Quizplus · Accepted Answer

(R - C)(485) = R(485) - C(485)
Since the sales department estimates that no more than 485 units can be sold at the given price, the revenue will be R(485) = 70(485) = 33,950. 
The total cost of producing 485 units will be C(485) = 60(485) + 3,680 = 33,600. 
Therefore, (R - C)(485) = 33,950 - 33,600 = 350, which represents a profit. 
Since the profit is positive, it is worth it for the firm to develop the new product. (R-C)(485) = R(485) - C(485)
= 70(485) - (60(485) + 3680)
= 33,950 - 29,580
= 4,370

This means that if the firm sells 485 units, they will make a profit of $4,370, which exceeds the cost of producing those units. Therefore, it is worth it for the firm to develop the product.

Solve the Problem. -A Firm Is Considering a New Product. the Accounting Department