Vandelay Industries manufactures a range of latex products. Vandelay recently purchased new equipment to manufacture latex gloves for the medical community. The new machinery costs $70,000 and can produce 40,000 pairs of gloves each day. The raw latex material for each pair of gloves costs $.03 and Vandelay sells the gloves at a wholesale price of $.10 a pair. Considering only the cost of the new equipment, how many pairs of gloves does Vandelay need to sell to pay for the new machinery?
A) 1,000,000
B) 700,000
C) 70,000
D) 7,000

Question

Quizplus · Accepted Answer

To calculate the number of pairs needed to pay for the new machinery, divide the cost of the machinery by the profit per pair. The profit per pair is the selling price minus the cost of materials, which is $0.10 - $0.03 = $0.07. Therefore, $70,000 / $0.07 = 1,000,000 pairs.

Vandelay Industries Manufactures a Range of Latex Products