Question

A toy company manufactures a certain toy at a cost of $300 per day plus $25 per toy. The company sells the toy for $35. How many toys must the company sell in one day.

Answer 1

Answer:

30 toys to break-even in one day

Step-by-step explanation:

Let "x" be the number of toys the company makes in a day. The cost of the company is $ 300 per day + $ 25 per toy

Since, the cost is $25 for one toy, the cost for x toys would be $ 25x.

The cost $300 is the fixed cost and does not depend on how many toys are made in a day. Therefore, the total cost the company pays to make x toys in a day would be:

Total Cost = 300 + 25x

The company sells toy for $ 35 each. So x toys would be sold in $ 35x. Hence, total revenue/sales would be:

Total Sales = $ 35x

In order to break-even, the total cost in one day must be equal to total sales of the day i.e.

Total Cost = Total Sales

300 + 25x = 35x

300 = 10x

x = 30

This means, if the company makes and sells 30 toys it would break-even i.e. no loss no profit. For getting profit, the company had to sale more than 30 toys in a day.