Question

nick plans to start a home-base business producing and selling gourmet dog treats.He figures it will cost $20 in operating costs per week plus $0.50 to produce each treat.He planet to sell each treat for $1.50. How many treats does Nick need to sell per week to break even?

Answer 1

20 treat.

Explanation:

Given: Operation cost= $20 per week.

Cost to produce each treat= $0.50

Selling price= $1.50

Lets assume the total number of treat in a week be "x".

Cost of production =
`Fixed\ cost+ Variable\ cost`

⇒ Cost of production=
`\$ 20+ \$ 0.50 * x`

∴ Total cost of production per week is
`\$ 20+ \$ 0.50x`

Total selling price=
`selling\ price\ of\ each\ treat * \ total\ number\ of\ treat\ per\ week`

⇒ Total selling price=
`\$ 1.50* x= \$ 1.50x`

Break even is a point of business where cost of production is equal to total selling price.

∴ Forming an equation to have CP= SP ( Break even)

`\$ 20+ \$ 0.50x`=
`\$ 1.50x`

Subtracting both side by 0.50x

⇒
`20= 1.50x-0.5x`

⇒
`20= 1x`

∴ x= 20

Hence, Nick need to sell 20 treat per week to break even the business.