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Chapter 2: 13BP_b (page 148)

United Snack Company sells 50-pound bags of peanuts to university dormitories for \(20 a bag. The fixed costs of this operation are \)176,250, while the variable costs of peanuts are $0.15 per pound.

b. Calculate the profit or loss on 7,000 bags and on 20,000 bags.

Short Answer

Expert verified

The loss incurred by the company on selling 7,000 bags amounts to $88,750 and the profit earned by the company on selling 20,000 bags amounts to $73,750.

Step by step solution

01

Profit or loss on 7,000 bags

Profit/Loss=Quantity脳Priceperunit-Variablecostperunit-Fixedcost=7,000脳$20-$7.50-$176,250=$88,750

02

Profit or loss on 20,000 bags

Profit/Loss=Quantity脳Priceperunit-Variablecostperunit-Fixedcost=20,000脳$20-$7.50-$176,250=$73,750

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