Question

Barney works as a car salesman and earns $175 for every car that he sells. He has fixed expenses of $3100 every month. He has laid out his projected variable expenses as well as his projected car sales for the first 6 months of next year.

. EXPENSES VARIABLE                     CARS SOLD
january 2,600                                              32
feb 3,200                                                     36
march 1,600                                                   26
may 800                                                           22
which month will barney sell enough cars to pay for all his monthly expenses ?

Answer 1

feb

Explanation:

When the number of cars needed to be sold to meet fixed plus variable expenses is subtracted from the number of cars projected to be sold, the result is negative for all months listed except February. In that month, Barney covers is expenses.

We have computed ...

... (expected car sales) - (needed car sales)

where ...

... (needed car sales) = (variable expenses + fixed expenses)/(income per car sold)

For January, this calculation gives ...

... 32 - (2600 +3100)/175 = 32 -32.571 = -0.571

That is, Barney does not project he will sell enough cars to pay his January expenses.

In February, the result is 0, which means he will sell enough cars in February to pay all his monthly expenses.