If he produces 1,500 watches, what is the number of watches that he must sell during the season in order to break-even, given that he is able to sell all the watches produced?
Explanation:
From the previous solution, we can see that the total expense incurred by him in manufacturing 1,500 watches = Rs.2,55,000.
In order to break-even, he has to make a minimum revenue in order to recover his expenditure.
He gets Rs. 250 per watch sold and Rs. 100 on every watch not sold.
Let him sell x watches to break-even. So our equation will be 250x + 100(1500 – x) = 255000.
Solving this, we get x = 700 watches.
Hence, option (b).
[Note: Do not be confused by the statement "he is able to sell all the watches". This is to tell you that if required to bread even he would be able to sell all watches.]
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