Question

The Naturally Made Bath and Body store pays $550 a month for rent and utilities. The average cost for its products to be manufactured is about $3.00 an item. If the average price for a product sold in the store is $5.50, what will the break-even point be?

Answer 1

Answer:

Break-even point is at quantity 220.

Step-by-step explanation:

Given the rent amount that is fixed cost for the store = $550

The average cost of the goods = $3

The average price of the goods = $5.50

Let the total number of break-even items = Q

Thus, total revenue = 5.50 x Q = 5.50Q

At break-even, TR = TC

5.50Q = FC + VC

5.50Q = 550 + 3Q

5.50Q - 3Q = 550

2.50Q = 550

Q = 550 / 2.50

Q = 220

Thus break-even point is at quantity 220.