- Identify the fixed expenses as \(\$2,200 + \$300 + \$500 = \$3,000\).
- Recognize the variable expenses equation as \(V(q) = 1.75q + 250\).
- Sum the fixed costs with the variable cost constant to get \(E(q) = 1.75q + (250 + 3000) = 1.75q + 3250\).
- Match the constant \(3250\) to option c.
- The final equation is \(E(q) = 1.75q + \boxed{3250}\).
Explanation
- Analysis of Expenses
To find the total expenses equation \(E(q)\), we must aggregate both fixed and variable costs. The fixed expenses are given as rent (\(\$2,200\)), insurance (\(\$300\)), and equipment lease (\(\$500\)). The variable expenses are expressed by the function \(V(q) = 1.75q + 250\), where \(q\) represents the number of items sold. The total expense function is the sum of these, denoted as \(E(q) = V(q) + \text{Fixed Expenses}\).
- Calculating Total Fixed Expenses
First, we calculate the total sum of all fixed expenses (\(F\)):
\[F = 2200 + 300 + 500\]
Summing these values:
\[2200 + 300 = 2500\]
\[2500 + 500 = 3000\]
So, the total fixed expense is \(\$3,000\).
- Formulating the Total Expenses Equation
Now, we combine the total fixed expenses with the variable expenses equation to determine the complete equation \(E(q)\). Given \(V(q) = 1.75q + 250\):
\[E(q) = (1.75q + 250) + 3000\]
We group the constant terms together:
\[E(q) = 1.75q + (250 + 3000)\]
\[E(q) = 1.75q + 3250\]
The constant term in the total expenses equation is \(3250\). Comparing this result with the provided options (a. 800, b. 2750, c. 3250, d. 1950), the correct choice is c.
Examples
Understanding how to combine fixed and variable costs is essential for any business owner, such as a coffee shop manager, to determine their break-even point and overall profitability. By correctly adding fixed costs like rent and insurance to the variable costs of ingredients per cup of coffee, a manager can create a clear financial model to price their products effectively and ensure the business remains sustainable. This mathematical approach helps in making informed decisions about daily operations and long-term financial planning.