Question
Jake runs a fruit and vegetable distribution business that buys products at whole sale price, package them and sell them through retailers for an agreed
Jake runs a fruit and vegetable distribution business that buys products at whole sale price, package them and sell them through retailers for an agreed commission. Currently Jake distributes potatoes only where he buys a kilogram for $0.75 and cost him $0.15 for packaging which then sells for $1.5. The retailer takes 20% of sales as commission, Jake pays salaries for 3 employees that sum up to $1500/Month, rents a warehouse with the packaging equipments for $1000/Month, pays $500/month for bills, and $1500 a month for distribution expenses.
Q1. Find the monthly breakeven point?
Q2. If Jake plans to make $1500 in profit next month, how many Kilograms does he need to sell?
Beside potatoes, Jake is planning to distribute three more products to increase profit (bananas, tomatoes and cucumbers). Knowing that 30% of customers buy Potatoes, 15% buy Bananas, 20% buy Tomatoes and 35% buy cucumbers, this will increase distribution expenses to $2200/Month and salaries to $2000/Month. Consider further information from the table below to answer the following questions:
Product | Selling Price per Kg in $ | Buying Price per Kg in $ | Retailer Commission per Kg in percentage | Packaging costs per Kg in $ |
Potatoes | 1.5 | 0.75 | 20% | 0.15 |
Bananas | 2.25 | 1.4 | 15% | 0.25 |
Tomatoes | 1.2 | 0.55 | 15% | 0.2 |
Cucumbers | 1.7 | 0.85 | 25% | 0.15 |
Q3. Find the monthly sales target for every product to breakeven?
Q4. If Jake plans to make $2000 in profit next month, how many Kilograms of each product does he need to sell?
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