A company manufactures replacement parts for construction cranes. The fixed manufacturing cost is $2,400 and the variable cost per part is $5.50. Each part is sold at $8.50.

The minimum number of parts the company must sell to break even is___?

The cost to the company =

$5.50 per part for x parts

$2,400 manufacturing

The money earned by the company =

$8.80 per part for x parts

For break even situation, the earnings must equal the cost:

8.80x = 5.50x + 2400

3.30x = 2400

x = 727.27

The company must sell 728 parts to break even (because 0.27 part cannot be sold)