Question

Jeremy opens a chocolate shop in the city. He pays $1,500 a month for rent and maintenance of the shop. The price of raw materials and manufacturing the chocolates is $6,000 a month. He sells the chocolates individually and in boxes of a dozen. Jeremy understands that his business needs a little time to become a success and decides that he wants to build a customer base initially. He is happy to break even for the first year. After a year, Jeremy prices his chocolates at $3 apiece. He offers a discount of 10% on boxes of chocolate to promote the sale of boxes. How many boxes of chocolate would he have to sell to recover the cost of running the business this year per month? (Assume that he sells no individual chocolates.) A. 188 boxes B. 208 boxes C. 226 boxes D. 232 boxes

Answer 1

Answer:

Total expenditure of Jeremy = $1500+6000 = $7500

Now, Cost of a box having a dozen chocolates = 12×3 = $36

If he gives 10% discount, then cost of each box is 36 - (10%of 36) = $32.4

So, number of boxes = 7500/32.4 = 231.4 = 232

Option (D)