Question

Paul is opening a business selling pies. He estimates that each pie will cost him $4.00 to make. He also has monthly expenses of $1000 for the shop. He plans on charging $10 per pie. How many pies will he need to sell to break even? How many pies will he need to sell to make a profit of $500?

Answer 1

Answer:a)167 pies

b) 217 pies

Explanation:

Breakeven is the point at which cost and income are equal

Let the number of pies be x.

Cost of making x pies = 4x

He also has monthly expenses of $1000 for the shop

Total cost = 4x + 1000

He plans on charging $10 per pie

Revenue for x pies = 10x

Profit = revenue for x pies- cost of making x pies

To break even

cost of making x pies+ monthly expenses = revenue

4x + 1000= 10x

6x = 1000

x = 166.7

Approximately 167 pies

To make profit of $500

Revenue at break even point = 167×10 = $1670

Revenue + profit = 1670+500=$2170

To get this new revenue at the price of $10 per pie

Number of pies to be sold = 2170/10

= 217 pies

He needs to sell 217 pies to make $500 profit