Question

The Naturally Made Bath and Body store pays $550 a month for rent and utilities. The average cost for its products to be manufactured is about $3.00 an item. If the average price for a product sold in the store is $5.50, what will the break-even point be?



Let x represent the number of products sold.

Answer 1

the product is sold at 5.50 and costs 3.00 to make per unit

therefore the profit is (5.50 - 3.00)

you can divide the cost of rent and utilities (550) by the profit (5.50-3.00) to find out how many units will be needed to pay for the rent/utilities, and thus "breaking even"

Answer 2

in case it wants an equation -

since x = the number of products sold, we can write an equation that equates costs = revenue to find the break-even point

(cost of rent) + (cost of manufacturing per item)*x = (sell price of each item)(x)

and solve for x. should give you the same result.