Question

I scream for ice cream sells specialty ice cream in three​ flavors: rocky​ road, peanut​ butter, and fruity tooty. it sold​ 17,000 gallons last year. for every five gallons of ice cream​ sold, one gallon is fruity tooty and the remainder is split evenly between peanut butter and rocky road. fixed costs for i scream for ice cream are​ $7,500 and additional information​ follows: rocky road peanut butter fruity tooty sales price per gallon ​$6.00 ​$5.00 ​$5.25 variable cost per gallon ​$5.25 ​$4.50 ​$4.00 the breakeven sales volume in gallons for i scream for ice cream is

Answer 1

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Find Sales Price of 5 gallons of ice-cream:
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Sales price of Fruity Tooty = $6.00
Sales price of Peanut Butter = $5 x 2 = $10.00
Sales price of Rocky Road = $5.25 x 2 = $10.50
Total Sales Per 5 gallon = $6 + $10 + $10.50 = $26.50

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Find Variable Cost of 5 gallons of ice-cream:
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Variable Cost of Fruit Tooty = $5.25
Variable Cost of Peanut Butter = $4.50 x 2 = $9.00
Variable Cost of Rocky Road = $4 x 2 = $8.00
Total Variable Coast = $5.25 + $9 + $8 = $22.25

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Fixed Cost Given:
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Fixed Cost = $7500

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Define x:
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Let x be the number of 5 gallons that need to be sold to breakeven:

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Find x:
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26.50x = 7500 + 22.25x

26.50x - 22.25x = 7500

4.25x = 7500

x = 7500 ÷ 4.25

x = 1764.7 (Nearest tenth)

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Find the number of gallons of ice-cream needed:
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Total number of 5 gallons needed = 1764.7

Total gallons needed = 1764.7 x 5 =8823.5

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Answer: I sceam needs to sell 8823.5 gallons of ice cream to break even.
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