John is an owner of a chocolate shop. He buys a chocolate-making machine for $400.
If he makes one chocolate bar for $3 and sells (each chocolate bar) for $8, what is the minimum amount of chocolate bars he has to sell to not be at a loss of money?
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For each chocolate bar he sells for $8, he is at a $3 loss due to manufacturing costs. So he gains 8-3 = $5 per chocolate bar. TO regain the money he spent on the machine(which was $400), he needs to sell 400/5 = 80 chocolate bars.
This is a simple way of thinking about marketing and business
'break even' point.
Let's make a variable ( m ) and set it to 0 (his beginning money). Because the chocolate-making machine costs $ 4 0 0 , m = − 4 0 0 . He gets $ 8 for selling one bar but needs $ 3 to make that bar so his profit is b a r $ 8 − $ 3 = $ 5 . We can see that the profit and the number of bars have a 5 : 1 correspondence. Because m = − 4 0 0 , We crank the profit up to 4 0 0 (to set m to a non-negative number(so he doesn't lose any money overall)). Since the profit and the number of bars have a 5 : 1 correspondence, the answer is 4 0 0 : 4 0 0 ÷ 5 = 8 0
He has a profit of 8-3=5$ per chocolate bar. 400/5=80 chocolate bars to be not t at loss of money.
For every chocolate he earns a profit of $5 ($8-$3).
As he had invested $400 for machine, he would need to sell $400/$5 chocolates
i.e 80 chocolates
Let n be the number of chocolate {he makes or sells}
We know that initially, he pays $ 4 0 0
∴ 4 0 0 + 3 n > 8 n 4 0 0 > 5 n n < 8 0
400=5X X=80 It doesn't make sense punt in accounting even what he spends to produce the chocolate... That's why you need to calculate just the profit he gets from it. If he produced 80 chocolates he will earn indeed: 640 dollars gross Which would be then equal to 640-(80*3)=400
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He makes $8-$3=$5 per chocolate bar, so he has to sell $400/$5=80 chocolate bars to not be at a loss of money.