Nantgwynfaen Organic Farm (NOF) is a farm growing a range of fruit and vegetables. It has a farm shop and offers accommodation with breakfast. It was set up by Amanda and Ken Edwards in West Wales, UK. NOF supports farmers by selling local organic produce in its farm shop. The produce from the farm shop is served to the visitors staying overnight at the farm. NOF is committed to being environmentally friendly by recycling, avoiding the use of packaging and reducing the use of electricity. NOF is looking to expand its product range by making and selling tubs of ice cream. A tub of ice cream will sell for £2.50. Variable costs will be £1.10 per tub of ice cream with fixed costs of £77 per day. Calculate the number of tubs of ice cream NOF will have to sell each day to break-even. You are advised to show your working.

Nantgwynfaen Organic Farm (NOF) is a farm growing a range of fruit and vegetables. It has a farm shop and offers accommodation with breakfast. It was set up by Amanda and Ken Edwards in West Wales, UK. NOF supports farmers by selling local organic produce in its farm shop. The produce from the farm shop is served to the visitors staying overnight at the farm. NOF is committed to being environmentally friendly by recycling, avoiding the use of packaging and reducing the use of electricity. NOF is looking to expand its product range by making and selling tubs of ice cream. A tub of ice cream will sell for £2.50. Variable costs will be £1.10 per tub of ice cream with fixed costs of £77 per day. Calculate the number of tubs of ice cream NOF will have to sell each day to break-even. You are advised to show your working.

Managerial Economics: A Problem Solving Approach

5th Edition

ISBN:9781337106665

Author:Luke M. Froeb, Brian T. McCann, Michael R. Ward, Mike Shor

Publisher:Luke M. Froeb, Brian T. McCann, Michael R. Ward, Mike Shor

Chapter23: Managing Vertical Relationships

Section: Chapter Questions

Problem 4MC

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Nantgwynfaen Organic Farm (NOF) is a farm growing a range of fruit and vegetables. It has a farm shop and offers accommodation with breakfast. It was set up by Amanda and Ken Edwards in West Wales, UK. NOF supports farmers by selling local organic produce in its farm shop. The produce from the farm shop is served to the visitors staying overnight at the farm. NOF is committed to being environmentally friendly by recycling, avoiding the use of packaging and reducing the use of electricity. NOF is looking to expand its product range by making and selling tubs of ice cream. Analyse how useful break-even calculations can be for NOF when deciding whether to include ice cream in its product range.
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