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2 March, 08:08

Jeremy opens a chocolate shop in the city. He pays $1,500 a month for rent and maintenance of the shop. The price of raw materials and manufacturing the chocolates is $6,000 a month. He sells the chocolates individually and in boxes of a dozen. Jeremy understands that his business needs a little time to become a success and decides that he wants to build a customer base initially. He is happy to break even for the first year. If Jeremy sells 2,400 individual chocolates and 50 boxes a month, how should he price his chocolates to break even, given the costs? (Assume that the price of a box is the same as the price of 12 individual chocolates.)

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  1. 2 March, 10:53
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    Amount of money paid by Jeremy as rent and maintenance of shop per month = $1500

    Cost of raw materials and manufacturing per month = $6000

    Total cost that Jeremy has to spend per month = (1500 + 6000) dollars

    = 7500 dollars

    Number of individual chocolates sold = 2400

    Number of chocolates sold in boxes = 50 boxes

    = (12 * 50) chocolates

    = 600 chocolates

    Then

    Total number of chocolates sold by Jeremy = 2400 + 600

    = 3000

    Now

    Price of each chocolate = 7500/3000 dollars

    = 75/30 dollars

    = 5/2 dollars

    = 2.5 dollars

    Price of 600 chocolates = 600 * (5/2) dollars

    = 300 * 5 dollars

    = 1500 dollars

    Price of 12 chocolates = (1500/600) * 12

    = 15 * 2

    = 30 dollars

    Then

    We can say that each box of chocolate should be sold at $30. All the loose chocolates should be sold at $2.5 each.
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