Question

Sam screen prints custom t-shirts. He spends $320 each month for the paints he needs to make the shirts. He has found he can purchase quality plain shirts for $9.00 each. He screen prints the shirts and sells them at a local thrift shop for $24.00 each. The thrift shop charges him $100 per month to rent. How many shirts does Sam have to sell each month in order to break even?

A) 30 shirts
B) 40 shirts
C) 50 shirts
D) 60 shirts
E) 70 shirts

Answer 1

To break even, Sam needs to sell enough shirts to cover his fixed monthly costs of $420. With a profit of $15 per shirt, he would need to sell 28 shirts, rounded up to 29 to not sell a fraction. So, option A) 30 shirts is the closest correct answer as he'd break even and make a small profit.

Step-by-step explanation:

We need to calculate how many shirts Sam must sell to cover his costs and break even. Sam has fixed costs of $320 for paints and $100 for shop rent, totaling $420 each month. The cost to Sam per shirt is $9, and he sells each for $24, giving him a profit of $15 per shirt ($24 - $9 = $15).

To break even, Sam's total profit from selling shirts must equal his fixed costs. So, we divide the fixed costs by the profit per shirt to find the number of shirts he needs to sell:

Number of shirts to break even = Fixed costs / Profit per shirt

= $420 / $15

= 28 shirts

Since Sam can't sell a fraction of a shirt, he must sell 29 shirts to cover his fixed costs and break even, which isn't one of the options. However, selling 30 shirts will cover his costs and provide a bit of profit. Therefore, the closest correct option to the exact figure is:

Answer: A) 30 shirts