Everything Donut plans to sell donuts at a local farmer's market.The permit and space rental will cost them $2,000 for the June through August season.The donuts will sell for $7.00 per dozen.Ingredients and overhead average $4.00 per dozen.They also have to pay five percent of her gross sales to the markets' organizers.How many dozens of donuts will they need to sell to cover fixed costs and realize a $3,000 profit?
A)752 dozen
B)1,667 dozen
C)1,887 dozen
D)1,250 dozen

Question

Quizplus · Accepted Answer

To cover fixed costs, Everything Donut would need to earn back the $2,000 fee for permit and space rental, as well as the 5% of gross sales they have to pay to the market organizers.

Total fixed costs:
$2,000 (permit and space rental fee) + 5% of gross sales

To realize a $3,000 profit:
Profit = Revenue - Costs 
$3,000 = (Number of dozens sold * $7.00 per dozen) - (Number of dozens sold * $4.00 per dozen) - $2,000 - 5% of gross sales

Simplifying this equation, we get: 
$3,000 + $2,000 + 5% of gross sales = Number of dozens sold * $3.00 per dozen

$5,000 + 0.05 * (Number of dozens sold * $7.00) = Number of dozens sold * $3.00

$5,000 + 0.35 * Number of dozens sold = 3 * Number of dozens sold

$5,000 = 1.65 * Number of dozens sold

Number of dozens sold = $5,000 / 1.65

Number of dozens sold = 1,887.88

Rounding up to the nearest whole number, Everything Donut would need to sell 1,888 dozens of donuts to cover fixed costs and realize a $3,000 profit.

Therefore, the best choice is C) 1,887 dozen.

Everything Donut Plans to Sell Donuts at a Local Farmer's