Question

Sam is selling homemade cookies to raise money for charity. Each cookie sells for $.50. Sam spent $90 on baking supplies and each cookie will cost $.25 to me. How many cookies does Sam need to sell before making a profit?

Answer 1

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Answer:

  360

Step-by-step explanation:

Sam obtains a "contribution margin" of $0.50 -0.25 = $0.25 per cookie. That will cover the cost of baking supplies when he sells ...

  $90 / ($0.25/cookie) = 360 cookies

Sam needs to sell 360 cookies before he can start making a profit.

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If you like, you can find Sam's break-even point by equating revenue and cost. The is the number of cookies Sam must sell for a profit of 0, that is, for non-negative profit.

  P = R - C

  0 = R - C

  R = C

  0.50n = 90 +0.25n

  0.25n = 90 . . . . subtract 0.25n

  n = 90/0.25 = 360 . . . .divide by the coefficient of n

You may notice this is similar to our description above.