Question

Next Friday, you plan to sell cakes at a bake sale to raise money for your school. You plan to charge $30 per cake, and you anticipate that you will sell 10 cakes. You can either purchase cakes to sell or bake them yourself. If you purchase the cakes, they will cost $21 each. If you bake your own cakes, your cost depends upon the number of cakes you bake, as shown in the table below. Number of cakes Total cost of 136 a) How many cakes should you bake? How many cakes should you purchase? Bake c ake(s) and purchase O cake(s). b) Given your answer to part a, how much in total will the 10 cakes cost you? C) How much would it have cost you to bake all 10 cakes? $ 190 d) How much would it have cost you to purchase all 10 cakes? $ 29

Answer 1

No. of cakes you bake(Q)	TC($)	MC($)=∆TC/∆Q
0	0
1	10	10
2	22	12
3	36	14
4	52	16
5	70	18
6	90	20
7	112	22
8	136	24
9	162	26
10	190	28

The MC of baking 6th cake is $20 and the MC of baking 7th cake is $22. Since the MC of baking 7th cake is greater than purchasing cost,i.e., $21, therefore, you should bake only 6 cakes and purchase 4 cakes.

a) Bake 6 cakes and purchase 4 cakes.

b) Total cost = $90 + ($21 * 4) = $174

c) Ans: $190      [Given in the table]

d) Total cost of purchasing 10 cakes = $21 * 10 = $210