Eric wants to start a car detailing business but is unsure how many cars he will...

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Eric wants to start acar detailing business but is unsure how many cars he will need todetail before making a profit. His cousin has offered to let himuse a small section of his shop for only $300 per month. Eric isgoing to pay his friend $10/hour to help him. He has estimated hisadditional expenses and other details to be the following:
Insurance $200/month
His share of monthly utilities $95
Wax (will yield 10 cars) $19.00
Towels, soap, and other supplies $3.00/vehicle
Leasing of equipment $100/month
Marketing $105/month budgeted
He estimates that it will take him 4.5 hours to detail avehicle if he has help from his friend.
He plans to charge $90 per vehicle.
Question - How manyvehicles does Eric need to detail each month to break even?
Scenario2
Eric is nowconsidering leaving his full-time job to grow his car detailingbusiness but he does not want to lose his salary.
Question- if hedecides to pay himseld $2000 per month how many cars does he haveto detail to break even?

Answer & Explanation Solved by verified expert

4.5 Ratings (697 Votes)

Scenario 1 The number of vehicles needed each month to break even is calculated as follows Break Even Vehicles Total Fixed CostPrice Variable Cost Here Total Fixed Cost Rent Insurance Utilities See Answer

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Eric wants to start acar detailing business but is unsure how many cars he will need todetail before making a profit. His cousin has offered to let himuse a small section of his shop for only $300 per month. Eric isgoing to pay his friend $10/hour to help him. He has estimated hisadditional expenses and other details to be the following:Insurance $200/monthHis share of monthly utilities $95Wax (will yield 10 cars) $19.00Towels, soap, and other supplies $3.00/vehicleLeasing of equipment $100/monthMarketing $105/month budgetedHe estimates that it will take him 4.5 hours to detail avehicle if he has help from his friend.He plans to charge $90 per vehicle.Question - How manyvehicles does Eric need to detail each month to break even?Scenario2Eric is nowconsidering leaving his full-time job to grow his car detailingbusiness but he does not want to lose his salary.Question- if hedecides to pay himseld $2000 per month how many cars does he haveto detail to break even?