Question

Jeremy opens a chocolate shop in the city. He pays $1,500 a month for rent and maintenance of the shop. The price of raw materials and manufacturing the chocolates is $6,000 a month. He sells the chocolates individually and in boxes of a dozen. Jeremy understands that his business needs a little time to become a success and decides that he wants to build a customer base initially. He is happy to break even for the first year. After a year, Jeremy prices his chocolates at $3 apiece. He offers a discount of 10% on boxes of chocolate to promote the sale of boxes. How many boxes of chocolate would he have to sell to recover the cost of running the business this year per month? (Assume that he sells no individual chocolates.)

Answer 1

Answer: 232

Question: How many boxes of chocolate would Jeremy has to sell to recover the cost of running the business this year per month? (Assuming that he sells no individual chocolates.)

Given:

Expenses per month:

Rental -- $1,500

Raw materials and manufacturing -- $6,000

Discount given per box of one dozen – 10%

Solution:

If Jeremy sells his chocolate at $3 per piece, then a box of one dozen costs $36. If he gave a discount of 10%, then the price is lowered by $3.6. The discounted price is $32.4.

Total expenses will be $1,500+$6,000= $7,500

This amount of expenses must be equal to the revenue (discount included).

The number of boxes of chocolate Jeremy has to sell is computed as:

$7,500/$32.4= 232