Question

a watch dealer incurs an expense of rs. 150 for producing every watch. he also incurs an additional expenditure of rs. 30 000 which is independent of the number of watches produced. if he is able to sell a watch during the season he sells it for rs. 250. if he fails to do so he has to sell each watch for rs. 100.if he produces 1500 watches what is the number of watches that he must sell during the season in order to breakeven given that he is able to sell all the watches produced? *

Answer 1

Production Cost of 1500 watches =  1500 * 150 + 30000 = Rs 255000

Amount Realized on the sale of 1500 watches = 1200 * 250 + 300 * 100 = Rs 330000

Profit earned = 330000 - 255000 = Rs 75000

Answer 2

The break-even should be 700.

Expense incurred = 150

Additional expenditure = 30,000

Production Cost of 1500 watches

=  1500 × 150 + 30000

= Rs 255000

Total  amount realized on the sale of 1500 watches

= 1200 × 250 + 300 × 100

= Rs 330000

Profit earned = 330000 - 255000 = Rs 75000

Now,

Break even implies the cost price being equal to selling price

Let the watched sold in season be = x

Cost price = 1500 × 150 + 30000 = 255000

Thus, selling price = 250x + ( 1500 - x)100 = 255000

x = 700