Question

A retailer incurs a fixed cost of N$ 500 when purchasing sugar for his stock. He pays N$ 10.00 per packet which he resells at N$ 15.00 per packet. How many packets should he purchase and sell in order to break even?

Answer 1

100 packets

Explanation:

Given :

Cost = fixed cost + variable cost

Fixed cost = $500

Variable cost = $10

Sales price = $15

Let :

Number of packets = x

To break even :

fixed cost + variable cost = sales made

500 + 10x = 15x

500 = 15x - 10x

500 = 5x

x = 500 / 5

x = 100

100 packets