Question

A café has a monthly fixed cost of $4700, and a typical customer order costs the café $2. Therefore, the cost to serve x customers in a month is given by x = 4,700 + 2x. The typical order costs $10. So revenue is y = 10x. Find the number of customers that would need to come in the café for the company to break even. (Intersection point)

Answer 1

The number of customers that would need to come in the café for the company to break even is 470.

Explanation:

Given

Revenue = y = 10x ……………….…. (1)

Cost = x = 4,700 + 2x ……………… (2)

Since the company will break even when Revenue is equal to Cost, we therefore equate equations (1) and (2) and then solve for x as follows:

10x = 4,700 + 2x

10x - 2x = 4,700

x = 4,700 / 10

x = 470

Therefore, the number of customers that would need to come in the café for the company to break even is 470.