Jermy makes wooden toys. He pays a monthly rent of $594 for his work studio and $8 in materials for each toy. He then sells each toy for $35. How many toys must he sell to break even?

Answer 1

Let X be defined as the number of toys Jermy makes in a given month.

Cash outflow consists of fixed cost and variable cost:

Fixed cost = $594 This amount does not depend on how many toys Jermy produces.

variable cost= $8*X This depends on how many toys he makes. For example 3 toys would be 8*3=$24

Cash inflow (how much he makes):

$35*X Note that obviously this depends on how many toys he is selling.

For breakeven we should have: 594+8X=35X

subtracting 8X on both sides we get: 594=27X

So X=594/27= 22

Hence he needs to sell 22 toys in a given month to break even.

Answer 2

35x = 8x +594; 27x = 594; x = 22