Mr A purchases a car wash Business for $15000. Car wash is for $5.50 and variable cost is $1.5 per car. How many cars must be washed To recover the purchased cost.

Answer 1

Fatima,

Considering Fixed Cost Zero, This Car Wash has to complete 3,750 orders to meet the purchase price of car wash machine.

Sales: 3750 x 5.50 = 20,625

Variable Cost: 3750 x 1.50 = 5,625

Net Amount = 20,625 - 5,625 = 15,000

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How I find the amount of orders:

Unit Price =5.50

Less; Variable Price = 1.50

Net Savings from one Order = 4.00

Orders = Cost of Machine /(divided by) Net Savings from one order

Orders = 15000 / 4

Orders = 3,750

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