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NeTakaya
2 years ago
13

Rachelle is the owner of a full-service car wash. For the month of December she paid $2,000 in rent, $700 in utilities, $2,950 i

n salaries, and $50 on advertising. A full service car wash costs $10.50. Unit variable costs per car wash are $2.50. How many full-service car washes does Rachelle need to sell to break-even each month?
Business
1 answer:
Ilya [14]2 years ago
4 0

Answer:

Total Fixed costs:      $

 Rent                       2,000

Utilities                    700

Salaries                   2,950

Advertising             50

Total fixed cost       5,700

Contribution per car = Selling price - Unit variable cost

                                    = $10.50 - $2.50

                                    = $8.00 per car      

Break-even point in full-service car

= <u>Total fixed cost</u>

  Contribution per car

=  <u>$5,700</u>  

     $8.00    

=   712.5 = 713 cars                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      

Explanation:

Break-even point in full-service car equals total fixed cost divided by contribution per car. Contribution per car is selling price minus variable cost per car.

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