EAT's Fruit Stand currently sells 60,000 heads of fruit each year for P1.00 per fruit....
80.2K
Verified Solution
Link Copied!
Question
Accounting
EAT's Fruit Stand currently sells 60,000 heads of fruit each year for P1.00 per fruit. EAT is thinking of expanding operations and serving the customer better by purchasing a "slice and dice" machine that will cut up each head of fruit into bite-size pieces. EAT expects he will then be able to sell his fruits for P1.70 per head. EAT has prepared the following analysis for each option based on sales of 60,000 heads of fruits.
Selling Unsliced Fruit:
Per Head
Total
Variable costs
P0.25
P15,000
Fixed Costs
0.30
18,000
Total
P0.55
P33,000
Selling Sliced Fruit:
Per Head
Total
Variable costs
P0.30
P18,000
Fixed Costs
0.90
54,000
Total
P1.20
P72,000
Assume that EAT is currently selling only 50,000 heads of fruits per year instead of 60,000. Under this scenario, what will be EAT's increase/decrease in profit for the year if he chooses to sell it a whole instead of slicing up the fruit?
Answer & Explanation
Solved by verified expert
Get Answers to Unlimited Questions
Join us to gain access to millions of questions and expert answers. Enjoy exclusive benefits tailored just for you!
Membership Benefits:
Unlimited Question Access with detailed Answers
Zin AI - 3 Million Words
10 Dall-E 3 Images
20 Plot Generations
Conversation with Dialogue Memory
No Ads, Ever!
Access to Our Best AI Platform: Flex AI - Your personal assistant for all your inquiries!
