Question

At the beginning of January, Kesia Records paid $148,950 to acquire the exclusive rights to a new album. It costs them $1.13 to print a copy of this album, which they can sell for $9.75. The following chart shows the sales of that record, along with the overhead expenses of running a record studio, not counting production costs. Month Albums Sold Expenses Jan. 5,486 $27,714 Feb. 8,191 $21,689 Mar. 4,796 $25,195 Apr. 7,490 $28,766 May 6,272 $24,604 Jun. 5,131 $29,040 In whch month did Kesia Records first break even? a. January b. March c. April d. May

Answer 1

d

Explanation:

Answer 2

d. May

Explanation:

To find when Kesia records got to break even, we first need to find how much they made total per month.

Now we need to first find how much they made on January.

The production cost of January will be:

Production cost = 5486 x 1.13

Production cost = $6199.18

Now that we know the production cost, we need to solve first for the total revenue.

Total Sales Revenue = 5486 x 9.75

Total Sales Revenue = $53488.50

Now that we have both the revenue and the production cost, we need can find how much profit by:

Profit = Total Sales Revenue - Production cost - Overhead

Profit = 53488.50 - 6199.18 - 27714

Profit = $19575.32

So they made a profit of $19575.32 by the end of January.

Now we move on to the other months.

Production cost = 8191 x 1.13

Production cost = $9255.83

Total Sales Revenue = 8191 x 9.75

Total Sales Revenue = $79862.25

Profit = 79862.25 - 9255.83 - 21689

Profit = $48917.42

Now that we have the profit for 2 months, we simply add them together.

Current Value = 19575.32 + 48917.42

Current Value = 68492.74

By doing the same process with the rest of the months, we get:

Refer to Image.

We can see in the image that by May they reach a total profit of $149897.77.

Since Kesia records paid $148950, the company got to break even at the month of May.