You are setting up a small business and have made an initial investment of $$18,000\$ 18,000$ . The unit cost of the guitar you are producing is $37.5 , and the selling price is $77.5 . How many guitars must you sell to break even?

A) 450 guitars
B) 600 guitars
C) 900 guitars
D) 1050 guitars
E) 1100guitars

Question

You are setting up a small business and have made an initial investment of

$18,000\$ 18,000

. The unit cost of the guitar you are producing is $37.5 , and the selling price is $77.5 . How many guitars must you sell to break even?

A) 450 guitars
B) 600 guitars
C) 900 guitars
D) 1050 guitars
E) 1100guitars

tinika culpepper · Accepted Answer

Final Answer : A, Explanation :   The break-even point is reached when the total revenue equals the total cost. The total revenue is equal to the selling price per guitar multiplied by the number of guitars sold. The total cost is equal to the unit cost per guitar multiplied by the number of guitars produced. In this case, the break-even point is reached when:  77.5 x = 37.5 x + 18 , 000 77.5x = 37.5x + 18,000 77.5 x = 37.5 x + 18 , 000  Solving for x, we get:  40 x = 18 , 000 40x = 18,000 40 x = 18 , 000 x = 450 x = 450 x = 450  Therefore, the correct answer is A) 450 guitars.

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