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Question

Two people decide to open a business reconditioning toner cartridges for copy machines. They rent a building for $7000/year and estimate that building maintenance, taxes, and insurance will cost$6500/year. Each person wants to make $12/h in the first year and will work 10 h per day for 260 days of the year. Assume that it costs$28 to restore a cartridge and that the restored cartridge can be sold for $45. How many cartridges must the business restore and sell annually to break even, not including the hourly wage the owners wish to earn?

Solution

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In order to break even, Cost to operate (CC) should be equal to total revenue(RR).

If nn is the number of cartridges to be sold in order to beak even, then:

13500+28n=48n13500=20nn=1350020n=675\begin{align*} 13500 + 28n &= 48n\\ 13500 &= 20n \\ n&= \dfrac{13500}{20}\\ n &= 675 \end{align*}

Hence, 675 cartridges\text{\textcolor{#4257b2}{675 cartridges}} should be sold annually to break even.

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