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MARKETING:​Kroger, the​ country's leading​ grocery-only chain, added a line of private label organic and natural foods call Simple Truth to its stores. If​ you've priced organic​ foods, you know they are more expensive. For​ example, a dozen conventionally farmed​ Grade-A eggs at Kroger costs consumers​$1.501.50​,whereas Simple Truth eggs are priced at​$3.453.45per dozen. One study found​ that, overall, the average price of organic foods is 85 percent more than that of conventional foods.​ However, if prices get too​ high, consumers will not purchase the organic options. One element of sustainability is organic​ farming, which costs much more than conventional​ farming, and those higher costs are passed on to consumers. Suppose that a conventional egg​ farmer's average fixed costs per year for​ conventionally-farmed eggs are​ $1 million per​ year, but an organic egg​ farmer's fixed costs arefourfourtimes that amount. Further assume that the organic​ farmer's variable costs of​$1.801.80per dozen aretwicetwiceas much as conventional​ farmer's variable costs.Most large egg farmers sell eggs directly to retailers. If​ Kroger's margin is2020percent based on its retail​ price, the​ farmer's price per dozen to the retailer for conventional eggs is​$1.201.20and for organic eggs is​$2.762.76.How many dozen eggs does a conventional farmer need to sell to break​ even? How many does an organic farmer need to sell to​breakeven?The variable cost per dozen of conventional eggs is​$nothing.​(Round to the nearest​ cent.)

Question

MARKETING:

​Kroger, the​ country's leading​ grocery-only chain, added a line of private label organic and natural foods call Simple Truth to its stores. If​ you've priced organic​ foods, you know they are more expensive. For​ example, a dozen conventionally farmed​ Grade-A eggs at Kroger costs consumers
​$1.501.50​,
whereas Simple Truth eggs are priced at
​$3.453.45
per dozen. One study found​ that, overall, the average price of organic foods is 85 percent more than that of conventional foods.​ However, if prices get too​ high, consumers will not purchase the organic options. One element of sustainability is organic​ farming, which costs much more than conventional​ farming, and those higher costs are passed on to consumers. Suppose that a conventional egg​ farmer's average fixed costs per year for​ conventionally-farmed eggs are​ $1 million per​ year, but an organic egg​ farmer's fixed costs are
fourfour
times that amount. Further assume that the organic​ farmer's variable costs of
​$1.801.80
per dozen are
twicetwice
as much as conventional​ farmer's variable costs.
Most large egg farmers sell eggs directly to retailers. If​ Kroger's margin is
2020
percent based on its retail​ price, the​ farmer's price per dozen to the retailer for conventional eggs is
​$1.201.20
and for organic eggs is
​$2.762.76.
How many dozen eggs does a conventional farmer need to sell to break​ even? How many does an organic farmer need to sell to​breakeven?
The variable cost per dozen of conventional eggs is
​$nothing.
​(Round to the nearest​ cent.)
check_circleAnswer
Step 1

Break even point in units means the sale of units where there is no profit or loss or the point where sales  contribution just cover the fixed cost. Break even units are computed by dividing the total fixed cost with the contribution per unit, where in contribution per unit= selling price per unit less variable cost per unit

Step 2

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