A bicycle store costs $2400 per month to operate. The store pays an average of $60 per bike. Then average selling price of each bicycle is $120. How many bicycles must the store sell each month to break even?
2400 / 60 = ?
40 bicycles
To determine the number of bicycles the store must sell each month to break even, we need to consider both the fixed costs (such as operating costs) and the variable costs (such as the cost per bike).
First, let's calculate the variable cost per bike: $120 (average selling price) - $60 (cost per bike) = $60.
Next, we need to determine how many bikes the store needs to sell in order to cover the fixed costs. We can use the formula:
Number of bikes to break even = Fixed costs / Variable cost per bike.
In this case, the fixed costs are given as $2400 per month. Plugging this into the formula, we have:
Number of bikes to break even = $2400 / $60 = 40.
Therefore, the store needs to sell 40 bicycles each month to break even.