amanda wants to start a home - based business making costume jewelry. she estimates that she will have to…

amanda wants to start a home - based business making costume jewelry. she estimates that she will have to spend $3,900 on equipment and that each item will require $3.90 in materials. she plans to sell each item for $8.49.\na. how many units must she sell to recover her equipment costs?\nnumber of units: 850\nb. what total revenue would this represent?\ntotal revenue: $7,213.73\nfor full marks your answer(s) should be rounded to the nearest cent.

amanda wants to start a home - based business making costume jewelry. she estimates that she will have to spend $3,900 on equipment and that each item will require $3.90 in materials. she plans to sell each item for $8.49.\na. how many units must she sell to recover her equipment costs?\nnumber of units: 850\nb. what total revenue would this represent?\ntotal revenue: $7,213.73\nfor full marks your answer(s) should be rounded to the nearest cent.

Answer

Explanation:

Step1: Calculate contribution per unit

Contribution per unit = Selling - Cost per unit. Here, selling price per unit is $$8.49$ and cost per unit for materials is $$3.90$. So, contribution per unit $=8.49 - 3.90=$4.59$.

Step2: Find number of units to recover equipment cost

To recover equipment cost of $$3900$, we divide equipment cost by contribution per unit. Let number of units be $n$. Then $n=\frac{3900}{4.59}\approx850$ (rounded to nearest whole - number as we can't sell a fraction of a unit).

Step3: Calculate total revenue

Total revenue = Number of units $\times$ Selling price per unit. We know number of units is approximately 850 and selling price per unit is $$8.49$. So total revenue $=850\times8.49 = 7216.50$.

Answer:

a. 850 b. $$7216.50$