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DVD A company that replicates DVDs spends \(1500 per day in building overhead plus \)0.80 per DVD in supplies and labor. If the DVDs sell for $1.59 per disk, how many DVDs must the company sell each day before it makes a profit?

Short Answer

Expert verified

The company must sell 1898 DVDs each day before it makes a profit.

Step by step solution

01

Step 1. State the formula.

The point just before making a profit is called the break even point. At such a point, the total cost is equal to the total earning.

02

Step 2. List the given data.

A company that replicates DVDs spends $1500 per day in building overhead plus $0.80 per DVD in supplies and labor. DVDs sell for $1.59 per disk.

03

Step 3. Formulate the equation.

Let the number of DVDs that the company must sell each day before it makes a profit be x.

Then, cost of supplies and labor per day is 0.80x.

The overhead cost per day is 1500.

Then, the total cost per day is 0.80x+1500.

The total earning per day is 1.59x.

According to assumption, total cost equals total earnings.

Then,

1.59x=0.80x+1500

04

Step 4. Solve the equation.

Solving,

1.59x=0.80x+1500 (Given equation)

1.59x0.80x=0.80x+15000.80x (Subtract 0.80xfrom both sides)

0.79x=1500 (Simplify)

0.79x0.79=15000.79 (Divide both sides by 0.79)

x1898.73 (Simplify)

Rounding to the nearest integer less than the obtained value, x=1898.

05

Step 5. Interpretate the obtained solution.

It was assumed that the company must sell x DVDs each day before it makes a profit. Using this condition, it was obtained that x=1898.

So, the company must sell 1898 DVDs each day before it makes a profit.

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