A wholesale food retailer is offered $14 per two-layer carton for 5000 cartons of peaches.The wholesaler can buy peaches from its growers at $12.50 per carton.Shipping costs $1.50 per carton,for the first 1000 cartons,and $1.00 per carton for every carton over that.Will taking this opportunity increase the value of the wholesale food retailer?

Question

Quizplus · Accepted Answer

To determine whether the wholesale food retailer will benefit from taking the opportunity, we need to calculate the total cost and revenue from selling 5000 cartons of peaches.

The total cost of buying the peaches from growers, including shipping costs, is:
$12.50 x 5000 = $62,500
Shipping cost for the first 1000 cartons = 1000 x $1.50 = $1500
Shipping cost for the remaining 4000 cartons = 4000 x $1.00 = $4000
Total shipping cost = $1500 + $4000 = $5500
Total cost = $62,500 + $5500 = $68,000

The total revenue from selling 5000 cartons at $14 per carton is:
$14 x 5000 = $70,000

Therefore, the wholesale food retailer will benefit from taking the opportunity, as the total revenue is greater than the total cost. 
$70,000 - $68,000 = $2,000
Thus, the costs are $2,000 less than the benefits.

A Wholesale Food Retailer Is Offered $14 Per Two-Layer Carton