The correct answer would be 12 Baskets.
If they spend $75 to advertise their sale, 12 baskets must be sold to break even.
Explanation:
Break even is a point where there is no loss and no profit for the product produced and sold.
Now material needed to make each basket = $3.75
Selling Price of Baskets = $10
Profit on each basket = Selling Price - Cost to make basket = $10 - $3.75 = $6.25
So the advertising expense is $75. Then to find that how many baskets must be sold to break even, we would divide the advertisement cost with the profit on each basket as follows:
$75 / $6.25 = 12
So 12 baskets are needed to be sold in order to break even.
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