Ampro-Mag is a small company that makes materials for safely controlling hazardous spills of all kinds.It sells these items as a neutralizing kit priced at $100.The costs of the materials that go into each kit are $45.It costs $5 in labor to assemble a kit.The company has monthly expenses of $1,000 for rent and insurance, $200 for heat and electricity, $500 for advertising in trade journals, and $3,500 for the monthly salary of its owner.What is Ampro-Mag's monthly break-even point in terms of number of neutralizing kits sold?
A)47 neutralizing kits
B)68 neutralizing kits
C)75 neutralizing kits
D)104 neutralizing kits
E)310 neutralizing kits

Question

Quizplus · Accepted Answer

To find the break-even point, we need to calculate the total cost and the total revenue.

Total Cost = (Cost of materials per kit + labor per kit) * number of kits + Monthly expenses
Total Cost = ($45 + $5) * X + $1,000 + $200 + $500 + $3,500
Total Cost = $50X + $5,200

Total Revenue = Price per kit * number of kits
Total Revenue = $100X

To break even, Total Revenue = Total Cost
$100X = $50X + $5,200
$50X = $5,200
X = 104

Therefore, the break-even point is 104 neutralizing kits. Any number of kits sold above this point will result in a profit for the company.

Ampro-Mag Is a Small Company That Makes Materials for Safely