The average cost of an item is defined as the total cost to produce it divided by the number of units produced .A shoe company that pays $240,000 in rent and employee salaries per year figures it also must pay $3.50 in materials per shoe set it produces. About how many shoe sets would the company need to produce for the average cost per shoe to be $7.50?
could someone explain this question to me like I'm a 5 year old?
The profit on each pair of shoes = 7.50-3.50 = 4.00 dollars
but it also costs 240,000 to run the company,
so the number of pairs of shoes to break even must be 240000/4 = 60,000
check:
to make 60000 pairs would cost 3.5*60000 + 240000 = 450,000
return on selling 60,000 at 7.50 each = 7.5*60000= 450,000
the answer is correct!
Curious.... where would a 5-year old get a question like this??
Sure!
Imagine you have a shoe company that needs to pay rent and employee salaries. These costs add up to $240,000 per year. The company also needs to buy materials to make the shoes, which costs $3.50 per shoe set.
Now, let's think about the average cost per shoe. To calculate this, we need to know how many shoe sets the company needs to produce.
If the average cost per shoe is $7.50, it means that for every single shoe made, the company spends $7.50 on average. We can use this information to figure out how many shoe sets the company needs to produce to reach this average cost.
So, to find the number of shoe sets, we divide the total cost by the cost per shoe:
Number of shoe sets = Total cost / Cost per shoe
In this case, the total cost is $240,000 (rent and salaries) and the cost per shoe is $7.50. So we can plug these values into the formula:
Number of shoe sets = $240,000 / $7.50
By dividing $240,000 by $7.50, we can find the number of shoe sets the company needs to produce to reach the average cost per shoe of $7.50.
I hope that explanation was helpful! Let me know if you have any other questions.
Of course! Let's break it down step by step.
1. The question is asking how many shoe sets the company needs to produce in order for the average cost per shoe to be $7.50.
2. The average cost of an item is calculated by dividing the total cost to produce it by the number of units produced.
3. In this case, the shoe company has certain costs to pay. They pay $240,000 in rent and employee salaries per year. Additionally, they need to pay $3.50 for materials for each shoe set they produce.
4. To find out how many shoe sets they need to produce for the average cost per shoe to be $7.50, we need to figure out the total cost to produce those shoe sets.
5. The total cost to produce the shoe sets can be calculated by adding up the cost of rent and employee salaries, and the cost of materials for each shoe set.
6. Since the average cost per shoe is $7.50, we know that the shoe company wants the total cost to produce the shoe sets to be equal to $7.50 multiplied by the number of units produced.
7. To find the number of shoe sets needed to produce, we can set up an equation: Total Cost = ($240,000 + $3.50 * Number of Shoe Sets) = $7.50 * Number of Shoe Sets.
8. We can then solve this equation to find the number of shoe sets needed for the average cost per shoe to be $7.50.
I hope this explanation helps!