Pamela's bakery produces 500 loaves of bread in a given year. Pamela pays $100 for flour and yeast, pays $600 in wages, pays $50 in interest on an existing loan, and pays $100 in taxes to the
Government. One of Pamela's bread slicing machines, which cost $75 each, wears out over the
Course of the year and must be scrapped. Pamela's profit for the year equals $75. Pamela's bread,
Therefore, sells for

Question

Quizplus · Accepted Answer

To calculate the selling price per loaf, first determine the total revenue. Pamela's total costs include $100 (flour and yeast) + $600 (wages) + $50 (interest) + $100 (taxes) + $75 (cost of the machine that was scrapped) = $925. Since Pamela made a profit of $75, the total revenue is $925 (costs) + $75 (profit) = $1000. Dividing the total revenue by the number of loaves (500) gives a selling price of $2.00 per loaf.

Pamela's Bakery Produces 500 Loaves of Bread in a Given