Question

The owner of a greenhouse and nursery is considering whether to spend $6,000 to acquire the licensing rights to grow a new variety of rosebush, which she could then sell for $6 each. Per-unit variable cost would be $3. How many rosebushes would she have to produce and sell in order to make a profit of $6,000? Group of answer choices

Answer 1

Answer: 4,000 rosebushes

Step-by-step explanation:

Given that,

Cost of acquire licensing rights(fixed cost) = $6,000

Selling price of each right = $6

Per-unit variable cost = $3

Profit = $6,000

Contribution per unit = Sales - Variable cost

= $6 - $3

= $3 per unit

Total contribution units produce and sold = Contribution per unit × units sold

= $3 x units produce and sold

Profit = Contribution - Fixed cost

$6,000 = ($3 x units produce and sold) - $6,000

$12,000 = $3 x units produce and sold

`units\ produce\ and\ sold = (12,000)/(3)`

= 4,000 units

Therefore, 4,000 rosebushes have to be produce and sold in order to make a profit of $6,000.