Question

Ete corporation produces bags of peanuts. its fixed cost is $17,400. each bag sells for $3.21 with a unit cost of $2.05. what is pete’s breakeven point?

Answer 1

Pete Corporation's breakeven point is calculated by dividing the fixed costs by the difference between the selling price per unit and the variable cost per unit. The calculated breakeven point is approximately 15,000 units sold.

Step-by-step explanation:

The student asked about the breakeven point for Pete Corporation, which produces bags of peanuts. To calculate the breakeven point, we use the formula:

Breakeven Point (units) = Fixed Costs / (Selling Price per Unit - Variable Cost per Unit)

Given that the fixed cost is $17,400, each bag sells for $3.21, and the unit cost is $2.05, the breakeven point calculation would be:

Breakeven Point = $17,400 / ($3.21 - $2.05) = $17,400 / $1.16

Breakeven Point ≈ 15,000 units

This means Pete Corporation must sell approximately 15,000 bags of peanuts to cover all its costs.