Study Appendix 2A. The Colorado Catering Company specializes in preparing Mexican dinners that it freezes and ships to restaurants in the Denver area. When a diner orders an item, the restaurant heats and serves it. The budget data for 20X5 are as follows:

The company prepares the items in the same kitchens, delivers them in the same trucks, and so forth. Therefore, decisions about the individual products do not affect the fixed costs of $680,000.
1. Compute the planned net income for 20X5.
2. Compute the break-even point in units, assuming that the company maintains its planned sales mix.
3. Compute the break-even point in units if the company a) sells only tacos, or b) sells only enchiladas.
4. Suppose the company sells 225,000 units of tacos and 75,000 units of enchiladas, for a total of 300,000 units. Compute the net income. Compute the new break-even point with this new sales mix. What is the major lesson of this problem?

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Product Chicken Tacos Beef Enchiladas $$4 Selling price to restaurants Variable expenses Contribution margin Number of units S5 $1 200,000 S2 100,000