A wholesale food retailer is offered $14 per carton for 5 000 cartons of peaches. The wholesaler can buy peaches from their growers at $12.50 per carton. Shipping costs $1.50 per carton, for the first 1 000 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 if taking the opportunity will increase the value of the wholesale food retailer, we need to compare the total costs of buying and shipping the peaches with the revenue generated from selling them at the offered price.

Total cost of buying and shipping 5,000 cartons of peaches: 
= (12.50 + 1.50) * 1,000 + (12.50 + 1.00) * 4,000 
= 14,000 + 50,000 
= $64,000

Total revenue generated from selling 5,000 cartons of peaches: 
= 14 * 5,000 
= $70,000

Profit = Revenue - Cost 
= $70,000 - $64,000 
= $6,000

Therefore, taking the opportunity will increase the value of the wholesale food retailer by $6,000. Since the costs are $2,000 less than the benefits, the correct choice is C.

A Wholesale Food Retailer Is Offered $14 Per Carton for 5