Question The manufacturer of widgets spends $5 to make each widget and sells them for $8. The manufacturer also has fixed costs each month of $1200. Find the number of widgets, x, that the manufacturer needs to sell in order to break-even. Provide your answer below:
Question The manufacturer of widgets spends $5 to make each widget and sells them for $8. The manufacturer also has fixed costs each month of $1200. Find the number of widgets, x, that the manufacturer needs to sell in order to break-even. Provide your answer below:
Managerial Economics: A Problem Solving Approach
5th Edition
ISBN:9781337106665
Author:Luke M. Froeb, Brian T. McCann, Michael R. Ward, Mike Shor
Publisher:Luke M. Froeb, Brian T. McCann, Michael R. Ward, Mike Shor
Chapter7: Economies Of Scale And Scope
Section: Chapter Questions
Problem 5MC
Related questions
Question
![**Question**
The manufacturer of widgets spends $5 to make each widget and sells them for $8. The manufacturer also has fixed costs each month of $1200.
Find the number of widgets, \( x \), that the manufacturer needs to sell in order to break-even.
Provide your answer below:
\( x = \) [ ]
**Explanation:**
To find the break-even point, we need to determine when the total revenue equals total costs.
1. **Cost per Widget:** $5
2. **Selling Price per Widget:** $8
3. **Fixed Monthly Costs:** $1200
**Break-even Calculation:**
Let \( x \) be the number of widgets sold.
- **Total Cost:** \( 5x + 1200 \)
- **Total Revenue:** \( 8x \)
At break-even, Total Cost = Total Revenue:
\[ 5x + 1200 = 8x \]
Solve for \( x \):
\[ 1200 = 8x - 5x \]
\[ 1200 = 3x \]
\[ x = \frac{1200}{3} \]
\[ x = 400 \]
Therefore, the manufacturer needs to sell 400 widgets to break-even.](/v2/_next/image?url=https%3A%2F%2Fcontent.bartleby.com%2Fqna-images%2Fquestion%2F7d78ec72-5057-49a7-a1d8-3f810d296395%2F18c7c971-19ee-4085-a0e9-7d8f39120184%2Fw64ax2d_processed.jpeg&w=3840&q=75)
Transcribed Image Text:**Question**
The manufacturer of widgets spends $5 to make each widget and sells them for $8. The manufacturer also has fixed costs each month of $1200.
Find the number of widgets, \( x \), that the manufacturer needs to sell in order to break-even.
Provide your answer below:
\( x = \) [ ]
**Explanation:**
To find the break-even point, we need to determine when the total revenue equals total costs.
1. **Cost per Widget:** $5
2. **Selling Price per Widget:** $8
3. **Fixed Monthly Costs:** $1200
**Break-even Calculation:**
Let \( x \) be the number of widgets sold.
- **Total Cost:** \( 5x + 1200 \)
- **Total Revenue:** \( 8x \)
At break-even, Total Cost = Total Revenue:
\[ 5x + 1200 = 8x \]
Solve for \( x \):
\[ 1200 = 8x - 5x \]
\[ 1200 = 3x \]
\[ x = \frac{1200}{3} \]
\[ x = 400 \]
Therefore, the manufacturer needs to sell 400 widgets to break-even.
Expert Solution
This question has been solved!
Explore an expertly crafted, step-by-step solution for a thorough understanding of key concepts.
This is a popular solution!
Trending now
This is a popular solution!
Step by step
Solved in 3 steps
Knowledge Booster
Learn more about
Need a deep-dive on the concept behind this application? Look no further. Learn more about this topic, economics and related others by exploring similar questions and additional content below.Recommended textbooks for you
Managerial Economics: A Problem Solving Approach
Economics
ISBN:
9781337106665
Author:
Luke M. Froeb, Brian T. McCann, Michael R. Ward, Mike Shor
Publisher:
Cengage Learning
Managerial Economics: Applications, Strategies an…
Economics
ISBN:
9781305506381
Author:
James R. McGuigan, R. Charles Moyer, Frederick H.deB. Harris
Publisher:
Cengage Learning
Exploring Economics
Economics
ISBN:
9781544336329
Author:
Robert L. Sexton
Publisher:
SAGE Publications, Inc
Managerial Economics: A Problem Solving Approach
Economics
ISBN:
9781337106665
Author:
Luke M. Froeb, Brian T. McCann, Michael R. Ward, Mike Shor
Publisher:
Cengage Learning
Managerial Economics: Applications, Strategies an…
Economics
ISBN:
9781305506381
Author:
James R. McGuigan, R. Charles Moyer, Frederick H.deB. Harris
Publisher:
Cengage Learning
Exploring Economics
Economics
ISBN:
9781544336329
Author:
Robert L. Sexton
Publisher:
SAGE Publications, Inc
Economics (MindTap Course List)
Economics
ISBN:
9781337617383
Author:
Roger A. Arnold
Publisher:
Cengage Learning
