A division of a company produces income tax apps for smartphones. Each income tax app sells for $7.

Question

A division of a company produces income tax apps for smartphones. Each income tax app sells for $7. The monthly fixed costs incurred by the division are $20,000, and the variable cost of producing each income tax app is $2.

(a) Find the break-even point for the division.

(x,y)=

(b) What should be the level of sales in order for the division to realize a 10% profit over the cost of making the income tax apps? (Round your answer up to the nearest whole number.)



Answer 1

7x=2x+20000

5x=20000

X=4000 is breaking even

7x= 1.1(2x+20000)

7x= 2.2x+ 22000

4.8x= 22000

48x=2200000

X=4583 1/3