Question

A camera manufacturer spends $2,000 each day for overhead expenses plus $9 per camera for labor and materials. The cameras sell for $17 each.
a. How many cameras must the company sell in one day to equal its daily costs?
b. If the manufacturer can increase production by 50 cameras per day, what would their daily profit be?

250; $400
170; $240
118; $656
250; $850

Answer 1

a) let the number of cameras sold per day for breakeven be x

Total daily cost = 2000 + 9x

Total daily revenue = 17x

therefore for just covering expenses both cost and revenue must be equal

2000 + 9x = 17x

2000 = 17x - 9x = 8x

x = 2000/8 = 250 cameras


b) increasing production by 50 cameras per day will give a daily profit of;

50 * (17 - 9) = 50 * 8 = $400 (seeing that the fixed daily cost of $2000 remains unchanged)


It's a