A five-pound bag of roasted peanuts sells for $8, and the average variable cost is $4 per bag. If the total fixed cost for the roasted peanuts is $80,000, the breakeven point in bags is:
A) 20,000
B) 40,000
C) 80,000
D) 120,000

Question

Quizplus · Accepted Answer

The breakeven point is the point at which total revenue equals total cost. Total revenue is equal to the price per bag multiplied by the number of bags sold. Total cost is equal to the variable cost per bag multiplied by the number of bags sold plus the fixed cost. So, the breakeven point is the number of bags sold at which the following equation is true:Price per bag * Number of bags sold = Variable cost per bag * Number of bags sold + Fixed costSubstituting the given values into the equation, we get:8 * Number of bags sold = 4 * Number of bags sold + 80,000Solving for the number of bags sold, we get:Number of bags sold = 20,000Therefore, the breakeven point is 20,000 bags.

A Five-Pound Bag of Roasted Peanuts Sells for $8, and the Average