What is the range of cases of cat food the company should sell per day to be profitable?
Given Details
1. Fixed cost of the company : $4500 per Day
2. Variable cost - $25 per day
3. Price of the cat food- $58-$0.40D
To find the range of cases of cat food the company should sell , first we need to find the minimum number of cases it should sell to reach the break even point.
Formula to arrive at the break even point is Fixed cost/ Selling price - Variable cost
So 4500/58-(25+0.40 ) i,e is equal to 138 cases
Company should sell more than 138 cases to remain in profit.
Conclusion:
The company should sell more than 138 cases in a day to maximize its revenue and to maximize its profit. With every one case from 138 case, company will be earning nearly 32rs per case. More the cases sold more the profit will be.
The range of case it should sell is greater than 138 cases.
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