Lee-Foods, Inc., sells 55-pound bags of tomatoes for $12 a bag.
The fixed costs of this operation are $79,000, while the variable costs of the tomatoes are $.11 per pound.
Please help,
I have worked this out like this please tell me if this is correct
FC $79,000 = $79,000 = my answer is 6,644?
P-VC 12.00 -$0.11 = 11.89
To determine the breakeven point in units, you can use the formula:
Breakeven Point (in units) = Fixed Costs / (Price per unit - Variable Cost per unit)
Let's apply this formula to the given details:
Fixed Costs (FC) = $79,000
Price per unit (P) = $12
Variable Cost per unit (VC) = $0.11
Breakeven Point (in units) = $79,000 / ($12 - $0.11)
= $79,000 / $11.89
To calculate this, divide the fixed costs ($79,000) by the price per unit minus the variable cost per unit ($11.89). The result will be the number of bags of tomatoes you need to sell to break even.
Now, let's calculate the breakeven point in units:
Breakeven Point (in units) = $79,000 / $11.89
≈ 6,647
So, your calculation of 6,644 is very close to the correct answer of 6,647 bags of tomatoes.