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?
Explanation:
Total cost to produced 1500 watches = (1500 × 150 + 30000) = Rs. 2,55,000
Let he sells x watches during the season, therefore
number of watches sold after the season = (1500 – x)
250 × x + (1500 – x) × 100 = 150x + 150000
Now, break-even is achieved if production cost is equal to the selling price.
150x + 150000 = 2,55,000
x = 700
Hence, option 4 is the correct answer.
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By: Amit Kumar