A small plant manufactures riding lawn mowers. The plant has fixed costs (leases, insurance, and so on) of $56,000 per day and variable costs (labor, materials, and so on) of $1,600 per unit produced. The mowers are sold for $2,000 each. The costs and revenue equations are shown below where x is the total number of mowers produced and sold each day, and the daily costs and revenue are in dollars.
y = 56,000 – + 1,600x Cost equation
y = 2,000x Revenue equation
(A) How many units must be manufactured and sold each day for the company to break even?
(B) Graph both equations in the same coordinate system and show the break-even point. Interpret the regions between the lines to the left and to the right of the break-even point.
i) What does the region between the lines to the left of the break-even point represent?
ii) What does the region between the line to the right of the break-even point represent?