Question

They sell cakes for $4 each and spent $45 for advertisement if each cake costs 80 cents to make, how many cakes do they need to sell to break even?

Answer 1

They need to sell 14 cakes to break even.

Explanation:

The selling price of each cake = $ 4

The amount spent on the advertisement = $45

The cost of each cake = 80 cents =$ 0.8

Let us assume the number of cakes sold to BREAK EVEN = m

⇒ For m cakes: TOTAL COST = TOTAL EARNED

Now, if the cost of 1 cake = $0.8

So, the cost of making m cakes = m X ( cost of 1 cake) = m x ( 0.8) = 0.8 m

Total Cost of m cakes = Making cost + Advertisement cost

= 0.8 m + $45

⇒C = 0.8 m + 45 ........... (1)

Here, the selling price of 1 cake = $4

So, the cost of selling m cakes = m X ( Sell cost of 1 cake)

= m x ( 4) = 4 m

⇒S = 4 m ........... (2)

To break even: S = C ⇒0.8 m + 45 = 4 m

or, 45 = 3.2 m

or, m = 45/3.2 = 14.06≈ 14

⇒ m = 14

Hence, they need to sell 14 cakes to break even.