Answered step by step
Verified Expert Solution
Link Copied!

Question

1 Approved Answer

3. Sales mix, three products exercise (10 Points): Candy offers three doughnut products, a full dozen, half dozen and the doughnut pop, with contribution margins

image text in transcribed

3. Sales mix, three products exercise (10 Points): Candy offers three doughnut products, a full dozen, half dozen and the doughnut pop, with contribution margins of $5.84, S4.49, and $2.27, respectively. She is estimating sales of 221,400 individual doughnuts in the coming period, consisting of 14,400 units of the full dozen. 7.200 units of the half dozen, and 5,400 of the doughnut pops. The estimated fixed costs for the period are $92,620. Revenue and fixed production labor costs for coffee are ignored in this problem. Required: 1. What is the company's breakeven point in individual doughnuts, assuming that the given sales mix is maintained? 2. If the sales mix is maintained, what is the total contribution margin when 232,200 doughnuts are sold? What is the operating income? 3. What would operating income be if the company sold, 9,600 units of the full dozen and 16,000 of the half dozen and 7,000 doughnut pops? What is the new breakeven point in units if these relationships persist in the next period? 4. Comparing the breakeven points in requirements 1 and 3, is it always better for a company to choose the sales mix that yields the lower breakeven point? Explain

Step by Step Solution

There are 3 Steps involved in it

Step: 1

blur-text-image

Get Instant Access to Expert-Tailored Solutions

See step-by-step solutions with expert insights and AI powered tools for academic success

Step: 2

blur-text-image

Step: 3

blur-text-image

Ace Your Homework with AI

Get the answers you need in no time with our AI-driven, step-by-step assistance

Get Started

Recommended Textbook for

Sound Investing, Chapter 18 - Significant Accounting Policies And Changes In Them

Authors: Kate Mooney

3rd Edition

0071719407, 9780071719407

More Books

Students also viewed these Accounting questions

Question

What is your theoretical orientation? (For Applied Programs Only)

Answered: 1 week ago