Problema Solution
Fred owns a small business that manufactures and sells clocks. The clocks cost $12.50 each to manufacture with a monthly overhaed of $4500. Fred sells the clocks for $37.50 each.
a)analyze and set-up a cost equation and a revunue equation for these clocks.
b)Find the cost and how many clocks Fred needs to make and sell to break even.
Answer provided by our tutors
a) Cost = $12.50 * x + $4500, where x is the number of clocks manufactured
Revenue = $37.50 * x
b) Break-even point occurs when cost = revenue, so:
$12.50 * x + $4500 = $37.50 * x
$4500 = $25.00 * x
x = 180
Break-even occurs when 180 clocks are manufactured at a cost of $12.50 * 180 + $4500 = $6750.