Question

7. The startup cost for a boutique is $15,000, and each floral arrangement costs $17 for the boutique to make. If each arrangement is then sold for $25, after how many arrangements does the boutique break even?

Answer 1

1875 arrangements

Explanation:

Break-Even is the point when costs are equal to profit.

The cost is 15,000

We need to cover this up with the profit we get from sales.

Each arrangement is 17 (cost) and is sold for 25, so the profit from each arrangement is:

25 - 17 = 8

So, with each arrangement sale, we make profit of $8. How many of these we need to sell in order to break even (in order to make 15,000)??

We simply divide this amount (15,000) by the profit we make from each arrangement ($8), so that would be:

Number of Arrangements Needed to Break-Even = 15,000/8 = 1875

After 1875 arrangements, the boutique breaks even.