A local pet store, Roscoe's Rascals, which has concentrated on selling puppies, is considering adding a line of pet food. A contractor estimates that it will cost $10,000 to convert some storage space into a retail area for the food. Roscoe's Rascals will purchase the specialty food for $15 and sell it for $30. Marketing research indicates that the store will sell 900 bags. Should Roscoe's Rascals add pet food to its products?

Question

Maldonado

Business

12 January, 16:41

A local pet store, Roscoe's Rascals, which has concentrated on selling puppies, is considering adding a line of pet food. A contractor estimates that it will cost $10,000 to convert some storage space into a retail area for the food. Roscoe's Rascals will purchase the specialty food for $15 and sell it for $30. Marketing research indicates that the store will sell 900 bags. Should Roscoe's Rascals add pet food to its products?

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Answers (1)

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Elian Gordon · Answer 1

yes because the break even quantitiy is less than the predicted sales.

Explanation:

Break even quantity = 10,000 / (30 - 15)

= 667

Predicted sales = 900

So break even quantity is less than predicted sales.

Therefore, yes because the break even quantitiy is less than the predicted sales.