Question

The owner of an office supply store initially spends $400 to bring in a new line of pens that he wants to sell. He buys a pack of 10 pens for $3 and sells each pack for $5. He plots one line to represent his costs and another to represent his income. Which statement about the situation is true?

A ) The store owner will never break even.
B ) The store owner’s costs will always be more than his income.
C ) The store owner will break even when he sells 200 packs of pens.
D ) The store owner will break even when he sells 1,000 packs of pens.
E ) The store owner’s income is more than his costs until he sells 200 packs of pens.

Answer 1

I used a break-even calculator to determine this:
The store owner will have to sell 200 packs of pens to break even

Hope this helps.

Answer 2

Option D is right

Explanation:

Given that the owner of an office supply store initially spends $400 to bring in a new line of pens that he wants to sell. He buys a pack of 10 pens for $3 and sells each pack for $5.

3 dollars fetch 10 pens

400 dollars fetch 4000/3 =1333.33 pens

10 pens sold for 5 dollars

Hence a pack of 10 pens fetch 5-3 = 2 dollars as profit.

The store owner has chances for break even as he has positive contribution.

Fixed costs = 400

This will be nullified when 2x100 dollas are earned extra

i.e. 100x10=1000 pens are sold

So option D is right