A small fast food restaurant invests $4000 to produce a new food item that will sell for $3.50. Each item can be produced for $2.15. How many items must be sold in order to break even? Round to the nearest item.
4000=N(3.5-2.15)=N(1.35)
N=4000/1.35=2963 check my math.
To find the number of items that must be sold in order to break even, we need to calculate the break-even point.
The break-even point is the point at which the total revenue equals the total cost.
First, let's determine the fixed costs. Fixed costs are costs that do not change regardless of the number of items produced. In this case, the fixed cost is the investment to produce the new food item, which is $4000.
Next, let's calculate the variable costs. Variable costs are costs that change based on the number of items produced. In this case, the variable cost per item is $2.15.
To calculate the break-even point, we use the following formula:
Break-even point = Fixed costs / (Price per item - Variable cost per item)
Plugging in the values we have:
Break-even point = $4000 / ($3.50 - $2.15)
= $4000 / $1.35
Dividing $4000 by $1.35, we find that the break-even point is approximately 2963 items.
Therefore, the small fast food restaurant needs to sell approximately 2963 items in order to break even.