Answer :
In order to determine the break even number of cakes, the equation that Ava can use is 150+4.5c=12c
The number of cakes that Ava must sell before she has made as much money as she has spent is 20
What is breakeven quantity?
The breakeven quantity is the number of cakes that Ava needs to make in order to cover all costs incurred in producing cakes, in essence, it is the number cakes that makes total revenue to be the same as the total costs, which can be modeled using the below breakeven unit formula:
total revenue=total costs
total revenue=selling price*breakeven units
selling price=12
breakeven units=c
total revenue=12c
total costs=fixed costs+(variable cost*breakeven units)
fixed costs=cost of equipment=150
variable cost per cake=4.5
total costs=150+4.5c
12c=150+4.5c
150+4.5c=12c
150=12c-4.5c
150=7.5c
c=150/7.5
c=20
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