document.write( "<A HREF=/cgi-bin/jump-to-question.mpl?question=107540>Question 107540</A>: <I><SPAN STYLE=\"word-break: break-all;\"> Diego Motors is a small car dealership. On average, it sells a car for<BR>\n" );
document.write( "$25,000, which it purchases from the manufacturer for $22,000. Each month, Diego Motors pays $50,000 in<BR>\n" );
document.write( "rent and utilities and $60,000 for salespeople’s salaries. In addition to their salaries, salespeople are paid a<BR>\n" );
document.write( "commission of $500 for each car they sell. Diego Motors also spends $10,000 each month for local advertisements.<BR>\n" );
document.write( "Its tax rate is 40%.<BR>\n" );
document.write( "1. How many cars must Diego Motors sell each month to break even?<BR>\n" );
document.write( "2. Diego Motors has a target monthly net income of $54,000. What is its target monthly operating income?<BR>\n" );
document.write( "How many cars must be sold each month to reach the target monthly net income of $54,000?\r<BR>\n" );
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document.write( "</I><HR><TABLE width=100%><TR><TD><B><A HREF=http://www.algebra.com/>Algebra.Com's</A> Answer #78334 by </B><A HREF=/tutors/aboutme.mpl?userid=stanbon><B>stanbon(75887)</B></A><img src=\"/images/stars/stars-13.gif\" alt=\"\" >&nbsp;<A HREF=/tutors/aboutme.mpl?userid=stanbon><IMG SRC=http://www.algebra.com/images/aboutme-small.gif BORDER=0 alt=\"About Me\" VALIGN=MIDDLE></A>&nbsp;<IMG SRC=http://www.algebra.com/images/nopicture.jpg><BR>You can <A HREF=\"/cgi-bin/embed-solution.mpl?show=1&solution=78334\">put this solution on YOUR website!</A><BR><SPAN STYLE=\"word-break: break-all;\"> Diego Motors is a small car dealership. On average, it sells a car for<BR>\n" );
document.write( "$25,000, which it purchases from the manufacturer for $22,000.<BR>\n" );
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document.write( "Let # of cars sold per month be \"x\"<BR>\n" );
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document.write( "Net car income = (25000-22000)x dollars<BR>\n" );
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document.write( "Each month, Diego Motors pays $50,000 in rent and utilities and $60,000 for salespeople’s salaries.<BR>\n" );
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document.write( "Operations overhead = 50000+60000= 110,000 dollars<BR>\n" );
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document.write( "In addition to their salaries, salespeople are paid a<BR>\n" );
document.write( "commission of $500 for each car they sell.<BR>\n" );
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document.write( "Commission costs = 500x dollars<BR>\n" );
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document.write( " Diego Motors also spends $10,000 each month for local advertisements.<BR>\n" );
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document.write( "Total operating expenses: 10,000+500x+110,000 = 120000+500x dollars<BR>\n" );
document.write( "Gross Income = 3000x<BR>\n" );
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document.write( "Gross profit 3000x-(120000+500x)= 2500x-120000<BR>\n" );
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document.write( "Its tax rate is 40%.<BR>\n" );
document.write( "Net profit after taxes: 0.60(2500x-120000) = 1500x-72000 dollars<BR>\n" );
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document.write( "1. How many cars must Diego Motors sell each month to break even?<BR>\n" );
document.write( "1500x-72000=0<BR>\n" );
document.write( "x = 48 cars<BR>\n" );
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document.write( "2. Diego Motors has a target monthly net income of $54,000. What is its target monthly operating income?<BR>\n" );
document.write( "1500x-72000 = 54000<BR>\n" );
document.write( "1500x = 126000<BR>\n" );
document.write( "x = 84 (number of cars it needs to sell to clear $54000)<BR>\n" );
document.write( "You'll have to figure out its \"target monthly operating income\".\r<BR>\n" );
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document.write( "====================<BR>\n" );
document.write( "Cheers,<BR>\n" );
document.write( "Stan H. </SPAN>\n" );
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