Betty Gilmore plans to sell berry pies at a local farmer's market. The permit and space rental will cost her $2,000 for the June through August season. The pies will sell for $7.00. Ingredients and overhead average $4.00 per pie. She also has to pay five percent of her gross sales to the markets's organizers. How many pies will she need to sell to cover her fixed costs?

Question

Quizplus · Accepted Answer

Betty's fixed costs are $2,000. Each pie nets $7 - $4 = $3 before the 5% sales commission. The commission per pie is $0.35 ($7 * 5%), leaving her with $2.65 ($3 - $0.35) per pie. To cover $2,000 in fixed costs, she needs to sell $2,000 / $2.65 ≈ 754.72 pies. Rounding up, she needs to sell 755 pies to cover her fixed costs, with a very small profit on the last pie.

Betty Gilmore Plans to Sell Berry Pies at a Local