Question

For a company that manufactures thermostats, the combined cost for labor and material is $5 per thermostat. Fixed costs (costs incurred in a given period, regardless of output) total cost equation is C 5x + 60,000. If the selling price of a thermostat is $7, then the revenue equation is R = 7x. How many thermostats must be sold for the company to earn a profit? Be sure to show the inequality you setup and the process by which you solve it. Include units on your answer. $60,000. So, the are

Answer 1

To earn a profit atlease 30,001 units of thermostats must be sold i.e not less than 30,000 thermostats

Explanation:

Data provided:

The combined cost for labor and material = $5 per thermostat

Total cost equation, C = 5x + 60,000

where, x is the number of thermostats

selling price of a thermostat = $7

The revenue equation, R = 7x

Now,

For the company to earn a profit

Revenue should be greater than the cost incurred

mathematically,

R > C

or

7x > 5x + 60,000

or

2x > 60,000

or

x > 30,000

Hence,

To earn a profit atlease 30,001 units of thermostats must be sold i.e not less than 30,000 thermostats