Brooke

Motors is a small car dealership. On average it sells a car for

$29,000,

which it purchases from the manufacturer for

$25,000.

Each month,

Brooke

Motors pays

$66,000

in rent and utilities and

$78,000

for salespeople's salaries. In addition to their salaries, salespeople are paid a commission of

$900

for each car they sell.

Brooke

Motors also spends

$12,000

each month for local advertisements. Its tax rate is 40%.

Required

1.	How many cars must Brooke Motors sell each month to break even?
2.	Brooke Motors has a target monthly net income of $76,500. What is its target operating income? How many cars must be sold each month to reach the target monthly net income of $76,500?

Requirement 1. How many cars must

Brooke

Motors sell each month to break even?

Let's begin by determining the formula for the breakeven number of cars.

Breakeven number of cars

=

Brooke

Motors must sell

nothing

cars each month to break even. (Round the number of cars up to the nearest whole number.)

Requirement 2.

Brooke

Motors has a target monthly net income of

$76,500.

What is its target operating income? How many cars must be sold each month to reach the target monthly net income of

$76,500?

Next, determine the formula to calculate the target operating income.

Target operating income

=

	-

The target monthly operating income is

$nothing.

Finally, determine the formula to calculate the number of cars that are required to be sold.

Quantity of cars required to be sold

=

	+

Brooke

Motors would need to sell

nothing

cars to reach the target monthly net income of

$76,500.

(Round the number of cars up to the nearest whole number.)