Question

A company manufactures and sells blank audiocassette tapes. The weekly fixed cost is ​$10,000 and it costs ​$0.40 to produce each tape. The selling price is ​$2 per tape. How many tapes must be produced and sold each week for the company to have a profit?

Answer 1

Answer:

6251 tapes

Explanation:

Given: fixed cost is ​$10,000.

           Variable cost is $0.40 to produce each tape.

            Selling price is $2 per tape.

Lets assume number of tapes to be produced and sold be "x"

We know, Total cost= $Fixed\ cost+ Variable\ cost$

∴ Total cost= $10000+ 0.40\times x$

Total cost= $10000+0.40x$

As given, selling price is $2 per tape.

∴ For attaining break even point, Tota cost = Selling price.

$10000+0.40x= 2x$

Solving the equation to find the value of x

⇒ $10000+0.40x= 2x$

Subtracting both side by 0.4x

⇒$10000= 1.60x$

Dividing both side by 1.60

⇒ $x= \frac{10000}{1.60}$

∴ x= 6250

Hence, number of tapes must be sold and purchased is 6250 to attain break even in the business, however selling one more tapes will get profit is 6251.