Chapter 6.5, Problem 45MR

To determine

To find the number of days to break even if the initial cost of business is $12,000, expense per day is $25 and earning per day is $150.

Answer to Problem 45MR

96 days.

Explanation of Solution

Given information:

The initial cost of business is $12,000, expense per day is $25 and earning per day is $150.

Calculation:

Let x days be required to break even.

Now the total expenses of business for x days are the sum of initial cost and expense for x days.

That is,

  $\text{Total}\text{cost}=12,000+25x$

And the earning in x days is,

  $\text{Total}\text{earning}=150x$

To break even, total cost and total expenses must be equal. That is,

  $\begin{array}{l}12000+25x=150x\\ \Rightarrow 125x=12000\\ \Rightarrow x=96\end{array}$

Hence 96 days are required to break even.