Calculating the Number of Necklaces Karen Needs to Sell to Cover Costs

Karen makes custom jewelry and rents a small kiosk at the local mall for $50 per month to sell her products. In addition to the rental fee, she also needs to purchase blank medallions, stones, and chains to create her custom necklaces. The cost of these supplies amounts to approximately $30 for each necklace that she makes.

To make a profit, Karen sells her necklaces for $55 each. The question now is, how many necklaces does Karen need to sell in order to cover her total monthly costs?

Answer:

She will break even each month / cover her costs by selling 2 necklaces

Explanation:

  • If it's $50 a month, that is Karen's total monthly cost
  • It costs $30 to make each necklace
  • She sells the necklace for $55 each
  • Total profit for each necklace therefore = sales price - cost, or $55 - $30, which is $25 profit per necklace
  • To cover rent, which is $50, you take rent / profit per necklace or $50 / $25 profit per necklace, which is 2 necklaces
How many necklaces must Karen sell to cover her costs? She needs to sell 2 necklaces.
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