A company manufactures and sells blank audiocassette tapes. The weekly fixed cost is $10,000 and it costs $0.40 to produce each tape. The selling price is $2 per tape. How many tapes must be produced and sold each week for the company to have a profit?

6251 tapes

Explanation:

Given: fixed cost is $10,000.

           Variable cost is $0.40 to produce each tape.

            Selling price is $2 per tape.

Lets assume number of tapes to be produced and sold be "x"

We know, Total cost=

∴ Total cost=

Total cost=

As given, selling price is $2 per tape.

∴ For attaining break even point, Tota cost = Selling price.

Solving the equation to find the value of x

⇒

Subtracting both side by 0.4x

⇒

Dividing both side by 1.60

⇒

∴ x= 6250

Hence, number of tapes must be sold and purchased is 6250 to attain break even in the business, however selling one more tapes will get profit is 6251.

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