Question
Each month, the owner of Brown Bear Car Wash pays $3,500 in rent, $700 in utilities, $650 interest on the business loan, an insurance premium
Each month, the owner of Brown Bear Car Wash pays $3,500 in rent, $700 in utilities, $650 interest on the business loan, an insurance premium of $150, and $400 on advertising on local bus routes. A full-service car wash is priced at $11.50. Unit variable costs for the car wash are $7.50. At what level oftotal revenuewill the car washbreak even?
One year later, the owner of the Brown Bear car wash realized that its advertisement on local bus routes was not very effective so she decided to stop spending money on the advertising. Instead, she decided to lower the price of the car wash to $9.00 in the hope that the lower price will attract more customers to the car wash. In addition, the owner decided to switch the detergent to a new highly efficient detergent that saves the car wash $0.20 per wash. Compared to the old plan,how many more or less car washdoes the Brown Bear car Wash need in order tobreak even under this new plan?
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