Question

Upon conducting a survey of their customers, Crunchy Pretzel Company (CPC) has learned that buyers would prefer CPC pretzels much more if CPC increased the salt content by 50%. Currently, one bag of pretzels is being sold at €1.09 with a €0.11 profit on each bag sold. The additional salt content will increase the production cost by €0.04 per bag. Last quarter, CPC sold 2.4 million bags of pretzels. Assuming the price of the product remains the same, if CPC increases the salt content by 50%, how many additional bags of pretzels will they have to sell to have the same total profit?

a. 1.6 million
b. 2.4 million
c. 3.0 million
d. 4.8 million

Answer 1

To maintain CPC's total profit after increasing production costs due to added salt, we calculate the new profit per bag and find the total number of bags needed to achieve the same profit. Subtract the original sales to find the additional bags required. The calculated answer does not match the given options, suggesting the need for data verification.

Step-by-step explanation:

The question asks how many additional bags of pretzels the Crunchy Pretzel Company (CPC) needs to sell to maintain the same total profit, after a production cost increase due to a 50% increase in salt content. We know the current profit per bag is €0.11, the current sale price is €1.09, and that CPC sold 2.4 million bags last quarter. With the additional €0.04 cost per bag for extra salt, the new profit per bag would be €0.07 (€0.11 - €0.04).

To find the number of additional bags needed to be sold, we calculate the total quarterly profit with the original profit margin, which is 2.4 million bags × €0.11 = €264,000. We then divide this total profit by the new profit per bag to get the number of bags needed to achieve the same total profit: €264,000 / €0.07 ≈ 3.77 million bags. To find the additional number of bags needed, subtract the original 2.4 million from 3.77 million, giving us approximately 1.37 million more bags, which is not one of the options provided. However, since the question's answer choices do not match this result, I would advise the student to ensure they have the correct data or options.

Based on the information provided, it looks like none of the answer options (a. 1.6 million, b. 2.4 million, c. 3.0 million, d. 4.8 million) match the calculated result. Therefore, it is essential to verify the data and provided choices.