Tuesday, April 30, 2013

A manufacturer sells watches for $23. The manufacturer has fixed costs of $5004 per month and variable costs of $11 per watch. How many watches must be sold to break even?

Break even occurs when revenue and cost are equal. In our case 

R%28x%29=23x
C%28x%29=11x%2B5004 

So we need to solve the equation: 

R%28x%29=C%28x%29 

or... 

23%2Ax=11%2Ax%2B5004
23x-11x=11x-11x%2B5004
12x=5004
%2812%2Ax%29%2F12=5004%2F12 

so x=417 watches

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