Question

The fixed cost of Widget Corp., a keyboard manufacturing company, is $600,000 per year. The cost of equipment and labor to make one keyboard is $10. If the customers would pay $25 to buy one keyboard, Widget Corp. needs to sell _____ keyboards to make profits.

Answer 1

Answer: more than 40000

Explanation:

Given : Fixed cost per year = $600,000

Cost of equipment and labor to make one keyboard = $ 10

Selling price of 1 keyboard = $25

Gain on each keyboard = Selling price - cost

= $25 - 410

= $15

Minimum number of keyboards need to sell to make profit =  ( Fixed cost) ÷ (Gain)

= 600,000  ÷  15

= 40000

Hence, Widget Corp. needs to sell more than 40000 keyboards to make profits.