The Atlantic Catering Company specializes in preparing tasty main courses that are frozen and shipped to the finer restaurants in the Halifax area. When a diner orders the item, the restaurant heats and serves it. The budget data for 2006 are

The items are prepared in the same kitchens, delivered in the same trucks, and so forth. Therefore, the fixed costs of $1,320,000 are unaffected by the specific products.

1. Compute the planned net income for 2006.

2. Compute the break-even point in units, assuming that the planned sales mix is maintained. 

3. Compute the break-even point in units if only veal marsala were sold or if only chicken cordon bleu were sold. 

4. Suppose 99,000 units of veal marsala and 297,000 units of chicken were sold. Compute the net income. Compute the new break-even point if these relationships persisted in 2006. What is the major lesson of this problem?

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Selling price to restaurants Variable expenses Contribution margin Number of units PRODUCT Chicken Veal Cordon Bleu Marsala $7 $9 $4 $5 $3 $4 250,000 125,000