207k views
2 votes
A company manufactures and sells blank audio cassette tapes. the weekly fixed cost is $4,000 ad it costs $1.00 to produce each tape. the selling price is $5 per tape. how many tapes must be produced and sold each week for the company to have profit

User Tall Jeff
by
7.1k points

1 Answer

5 votes
The number of tapes that should be produced and sold that will let the company have profit is 1 unit higher than the breakeven point. Breakeven happens when the total cost and total revenue is equal.

Total cost is equal to the sum of the fixed cost and the variable cost which is equal to,

TC = 4000 + x

where x is the number of units. The breakeven equation is,

4000 + x = 5x

Simplifying the equation will give us,
4x = 4000

x = 1000

The value of x from the equation is 1000.

Hence, the company should manufacture more than 1000 for them to have profit.
User JonnyRo
by
6.4k points