A dining room set costs $400, less 30% and 10%. The overhead costs are 25% of cost and operating profit is 30% of cost. After three months, the set is reduced to $200. What is the break-even price of the set?
A) $300.00
B) $390.60
C) $200.00
D) $325.00
E) $315.00

Question

Quizplus · Accepted Answer

The break-even price is calculated by adding the overhead costs and operating profit to the reduced cost. The initial cost after discounts is $400 * 0.7 * 0.9 = $252. Overhead costs are 25% of $252, which is $63, and operating profit is 30% of $252, which is $75.60. Adding these to the reduced cost of $200 gives $200 + $63 + $75.60 = $338.60. However, the break-even price should cover the initial cost, so the closest option is $315.00.

A Dining Room Set Costs $400, Less 30% and 10