Problema Solution
The fixed costs are $550000 and the variable costs are $120 per machine. The wholesale price of the machine will be $140. How many games must you sell for the company to break even?
Answer provided by our tutors
profit = revenue - cost
let 'n' represent the number of games sold:
cost = 120n + 550000
revenue = 140n
we want to solve for 'n' when cost equals revenue:
140n = 120n + 550000
20n = 550000
n = 550000/20 = 27500
27,500 games must be sold in order to break even