A beauty shop specializing in permanents has fixed costs of $2,121.60 per month. The owner estimates that the cost for each permanent is $23.60, which covers labor, chemicals, and electricity. If her shop can give as many permanents as she wants at a price of $44 each, how many must be given each month to break even?
A) 104 permanents
B) 102 permanents
C) 101 permanents
D) 99 permanents
E) 103 permanents

Question

Quizplus · Accepted Answer

To break even, the total revenue must equal the total costs. The fixed costs are $2,121.60, and each permanent costs $23.60 to provide. The price of each permanent is $44, so the profit per permanent is $44 - $23.60 = $20.40. To cover the fixed costs of $2,121.60 with a profit of $20.40 per permanent, we divide the fixed costs by the profit per permanent: $2,121.60 / $20.40 = 104 permanents.

A Beauty Shop Specializing in Permanents Has Fixed Costs of $2,121.60