Subjects business math

Net Income Stereos

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Net Income Stereos


1. **State the problem:** Ahnah rebuilds used stereos with variable costs of $170 per stereo and sells them for $300 each. The break-even point is 50 units per month. We need to find her net income when she sells 60 units. 2. **Formula and explanation:** The break-even point in units is given by: $$\text{Break-even units} = \frac{\text{Fixed Costs}}{\text{Price per unit} - \text{Variable cost per unit}}$$ At break-even, net income is zero. 3. **Find fixed costs:** Let $F$ be fixed costs. $$50 = \frac{F}{300 - 170} = \frac{F}{130}$$ Multiply both sides by 130: $$F = 50 \times 130 = 6500$$ 4. **Calculate net income for 60 units:** Net income formula: $$\text{Net Income} = (\text{Price} - \text{Variable Cost}) \times \text{Units Sold} - \text{Fixed Costs}$$ Substitute values: $$= (300 - 170) \times 60 - 6500$$ $$= 130 \times 60 - 6500$$ $$= 7800 - 6500 = 1300$$ 5. **Final answer:** Ahnah's net income for selling 60 units is $1300.00.