During the Summer,Paul sells ice creams from a van in a park at weekends.
His fixed costs for running the van are £200 per weekend.He buys ice cream ingredients from a wholesaler at a cost of 40p per ice cream,and sells them for £2.00 each.
If he wants to make a profit of £280,how many ice creams should he sell over the weekend?

Question

Quizplus · Accepted Answer

There are several ways to calculate the required quantity; one method is to add together the fixed costs and required profit, and divide by contribution per unit:Contribution is £1.60 per ice cream. Fixed costs + Profit = £480. £480/1.60 = 300 ice creams.Alternatively, BEP is 125 ice creams. Then everything else is "profit". £280/1.60 = 175 more ice creams.

During the Summer,Paul Sells Ice Creams from a Van in a Park