Question

Scenario: Suppose your business makes high-grade PDAs, personal digital assistants. It costs you $80,000 a month for fixed costs, such as rent, employee salaries, and other essential items. Also, it costs $300 to make each PDA, called a unit. If you are able to sell each unit for $500, how many PDAs do you need to sell to break even?

Step 1: Set up the variables.
Let x = the number of units 
y = the cost/income (expense/revenue) in dollars


Step 2: Write cost (expense) and income (revenue) equations.
Cost Equation: 
total cost = fixed cost + (cost to make each unit) · (# of units) 
y =   

Income Equation: 
total income =   
y =  

Step 3: Solve the system of equations using substitution.
 
Step 4: State the break-even point.

Answer 1

It costs you $80,000 a month for fixed costs, such as rent, employee salaries, and other essential items. Also, it costs $300 to make each PDA, called a unit. If you are able to sell each unit for $500, how many PDAs do you need to sell to break ... Let x = the number of units y = the cost/income (expense/revenue) in dollars.

Explanation: