Answer: the store needs to sell 50 bicycles each month to break even
Explanation:
The average selling price of each bicycle is $145.
When we talk of break even, we are referring to the point at which the income being accrued from a business is equal to the total cost of running the business. At this point, their is no profit and there is no loss.
From the example information given,
Total cost of running the business will be
cost of operating the bicycle store + the total amount the store pays per bike.
cost of operating the bicycle store
= $3500 per month
The store pays an average of $75 per bicycle. If the store buys x bicycles per month, then,
Total the total amount the store pays per bike = 75 × x = 75x
Total cost of running the business per month
= 3500 + 75x - - - - - - -1
The average selling price of each bicycle is $145. This means that the selling price for x bicycles will be
145 × x = 145x
Therefore , total income is $145x
To break even,
145x = 3500 + 75x
145x - 75x = 3500
70x = 3500
x = 3500 / 70 = 50