Break even question! Please help! Thank You!

Anonymous
timer Asked: Oct 11th, 2013
account_balance_wallet $5

Question Description

Ram Dubey recently purchased a chain of dry cleaners in North Uttar Pradesh. Although the business is making a modest profit now, Ram suspects that if he invests in a new press, he could recognize a substantial increase in profits. The new press costs $ 15,400 to purchase and install and can press 40 shirts an hour or 320 per day. Ram estimates that with the new press, it will cost $ 0.25 to launder and press each shirt, customers are charged $ 1.10 per shirt. Q1) How many shirts will Ram have to press to break even? 
Q2) So far Ram’s workload has varied from 50 to 200 shirts a day. How long would it take to break even on the new press at the low demand estimate? At the high demand estimate? 
Q3) If Ram cuts his price to $ 0.99 a shirt, he expects to be able to stabilize his customer base at 250 shirts per day. How long would it take to break even at the reduced price of $ 0.99? 
Q4) Should Ram cut his price and buy the new press?

Tutor Answer

max12
School: Cornell University

answer 1) net profit per shirt =1.10-.25=.85$
total profit on 320 shirts in one day=.85x320=272$
for break even he needs to earn 15400,hence no of days taken =15400/272= 56.61 days ,hence shirts pressed =320x56.61
=18118 shirts
answer 2)at low demand of 50 /day he will earn 50x.85=42.5$ per day,break even=15400/42.5=362.35 or take 363 days for break even
at high demand of 200 per day he will earn 200x.85=170$per day ,break even =15400/170=90.5 or take 91 days for break even
answer 3)cutting price to .99 $ a shirt he will get net profit=.99-.25=.74$per shirt
total earning per day=.74x250=185$ hence time taken for break even=15400/185= 83.24 or take 84 days for break even
answer 4) yes he should

flag Report DMCA
Review

Anonymous
Top quality work from this guy! I'll be back!

Similar Questions
Hot Questions
Related Tags
Study Guides

Brown University





1271 Tutors

California Institute of Technology




2131 Tutors

Carnegie Mellon University




982 Tutors

Columbia University





1256 Tutors

Dartmouth University





2113 Tutors

Emory University





2279 Tutors

Harvard University





599 Tutors

Massachusetts Institute of Technology



2319 Tutors

New York University





1645 Tutors

Notre Dam University





1911 Tutors

Oklahoma University





2122 Tutors

Pennsylvania State University





932 Tutors

Princeton University





1211 Tutors

Stanford University





983 Tutors

University of California





1282 Tutors

Oxford University





123 Tutors

Yale University





2325 Tutors