A packaging company has been offered a contract to create gift boxes for perfume/cologne. The company needs to buy a special machine to make the boxes. The machine costs $3,000, and each box costs $2 for labor and materials. The perfume/cologne maker as agreed
to buy each box for $5. (5 points)
How many boxes does the perfume/cologne maker need to order for the packaging company to break (blank) boxes
To break even, the packaging company needs to cover the cost of the machine and the cost of producing each box. Let's calculate the break-even point:
Cost of the machine: $3,000
Cost of producing each box (labor and materials): $2
Total cost per box: $3,000 + $2 = $5
Revenue per box: $5 (the perfume/cologne maker is buying each box for $5)
To find the break-even point, we need to divide the cost of the machine by the difference between the revenue per box and the cost per box:
Break-even point = Cost of the machine / (Revenue per box - Cost per box)
Break-even point = $3,000 / ($5 - $2) = $3,000 / $3 = 1000 boxes
Therefore, the perfume/cologne maker needs to order 1000 boxes for the packaging company to break even.