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Janice Smith Is an Expert at Calligraphy

Question 5

Essay

Janice Smith is an expert at calligraphy. However, it is found that a specialized robot can imitate Janice's work perfectly. Variable costs are 75% of selling price and fixed costs are $190,000 for the robot system.
a.How many pieces must be produced to break even assuming she sells each piece for $200?
b.How many pieces must be produced to break even if she sells them for $250 and variable costs drop to 70% of selling price?

Correct Answer:

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a.$200X = $190,000 + (.75)($20...

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