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iris [78.8K]
3 years ago
7

A manufacturer produces mugs at a cost of $2 daily. The company also has daily costs of $500. It then sells the mugs for $5. Wha

t is the break-
even point? (The number of mugs it has to sell to
cover all daily costs)​
Mathematics
1 answer:
iVinArrow [24]3 years ago
5 0
<h2>Answer:</h2>

<em>It has to sell 100 mugs.</em>

<h2>Explanation:</h2>

Remember that profit (P), Revenue (R), and cost (C) are related by the following formula:

P=R-C

The term break- even point occurs when the Revenue is equal to the Cost, making the profit to be equal zero. In other words:

0=R-C \\ \\ R=C

A manufacturer produces mugs at a cost of $2 daily. The company also has daily costs of $500. So each day the cost for the company is:

C=500

So the number of mugs the company produces every day is:

No. \ mugs=\frac{\$500}{\$2}=250

We also know that the company sells the mugs for $5, so the revenue is:

R=5x \\ \\ \\ x:\text{Number of mugs it has to sell tocover all daily costs}

Then by equating equations:

5x=500 \\ \\ Isolating \ x: \\ \\ x=\frac{500}{5} \\ \\ x=100

So<em> the company has to sell 100 out of 250 mugs it produces daily in order to  cover all daily costs.</em>

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