Paula Sango sells premium strawberries at a local fruit stan

Paula Sango sells premium strawberries at a local fruit stand. The cost to rent a fruit stand is $200 per MONTH and the equipment cost is $500 per YEAR.

What is the fixed cost PER YEAR?

The variable cost for 1 pound of fruit is $3.50. How many pounds does Paula need to sell PER YEAR to break even at $5.00 per pound.

If he was to raise the price to $6.00, what is the break even point (how many pounds)?

Solution

cost to rent a fruit stand is 200 per month

so 200 * 12 = 2400 per year

equipment cost 500 per year

FIXED COST PER YEAR = 2400 + 500 =2900

ow many pounds does Paula need to sell PER YEAR to break even at $5.00 per pound.

2900 / 3.50 = 828.57

2900 / 5 = 580

2900 / 6 = 483.33 = 483 pounds