Question

Candy bars are sold in a local store for 60 calends each. The factory has $1000 in fixed costs plus 10 cents of additional expense for each candy bar made. Assuming all candy bars manufactured can be sold, find the break-even point.

Answer 1

Given:

Candy bars are sold in a local store for 60 cents each. The factory has $1000 in fixed costs plus 10 cents of additional expense for each candy bar made.

To Find:

The break-even point.

Answer:

2000 candy bars have to be sold to break even.

Explanation:

Let the break-even point be x candy bars. That is, the manufacturing cost to make x candy bars equals the money made by selling x candy bars (we see there is no profit, no loss. Simply, the cost price equals selling price).

The factory has to spend $1000 in fixed costs plus 10 cents for each candy bar as an additional expense.

As each dollar equals 100 cents, $1000 = 100000 cents, which is the fixed cost.

Also, for making x candy bars, the additional expense for the factory would be equal to 10x.

So, the total cost in manufacturing x candy bars would be 100000 + 10x

Now, each candy bar is sold for 60 cents each. So the total selling price would be 60x.

As we have assumed x to be the break-even point, the cost of manufacturing will equal the selling price.

So,

`100000 + 10x = 60x\\\\100000 = 50x\\\\x = 10000/5 = 2000`

Thus, 2000 candy bars have to be sold to break even.