Question

Part A

Jennifer makes nail polish at home. Every month, she buys chemicals and dyes, which costs $3 per bottle of nail polish. She also buys glass bottles,which cost $0.50 each. She spends $500 per month to rent a warehouse space to store the nail polish. She sells the bottles for $7 each. How manybottles of nail polish does she need to make a profit?

Answer 1

143 bottles

Step-by-step explanation:

For Jennifer to make profits, she must make sales past the break-even point.

Break-even point is calculated by the formula

Break-even point = fixed costs/contribution margin per unit

In this case

Fixed costs =$500

Contribution margin per unit = selling price- variable costs

=$7 -($3 + $0.50) = $7 -$3.50

=$3.50

Break-even point = $500/$3.50

=142.85

=143 bottles