Donald Tweedt started a company to produce and distribute natural fertilizers. D

Question

Donald Tweedt started a company to produce and distribute natural fertilizers. Donald's company sells two fertilizers that are wildly popular: green fertilizer and compost fertilizer.

Green fertilizer, the most popular among environmentally-minded consumers, commands the highest price and sells for $16 per 30-pound bag. Green fertilizer also requires additional processing and includes environmentally-friendly ingredients that increase its variable costs to $10 per bag. Compost fertilizer sells for $12 and has easily acquired ingredients that require no special processing. It has variable costs of $8 per bag. Tweedt's total fixed costs are $35,000. After some aggressive marketing efforts, Tweedt has been able to drive consumer demand to be equal for each fertilizer.

Calculate the number of bags of green fertilizer that will be sold at break-even.

Explanation / Answer

Hi, If you like my answer, please rate my answer first and according to my answer...that way only I can earn points. Thanks Let the quantity of green and compost fertilizer each be Q/2. so that total quantity sold is Q. Total variable cost = Q/2 * ($8 + $10) = $9*Q Total Sales = Q/2 * ($16 + $12) = $14 * Q Total fixed costs are $35,000. at breakeven $14 * Q = $35000 + $9*Q which gives Q = 7000 So, No. of green fertilizer bags sold = 7000/2 = 3500

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