After taking business classes, Jake, an avid dog-lover, decided to start selling unique pet supplies at trade shows. He has two products:

Product 1: "Launch-it"- a tennis ball thrower that will sell for $5.

Product 2: "Treat-time"- an automatic treat dispenser that releases a treat when the dog places his paw on the pedal. The treat dispenser will sell for $20.

Costs: Jake has hired an employee to work the trade show booths. The work contract is $1,000 per month plus a commission equal to 10% of revenue. Jake will also spend $800 per month on trade-show entry fees. Jake is purchasing the products from a supplier in Mexico. Launch-its cost $1 each; Treat-times cost $5 each. Shipping and handling on the Launch-its will cost $2 each; Shipping and handling on the Treat-times, which are heavier, will cost $6 each. The shipping and handling costs will be paid by Jake, not the customer.

Assume Jake expects to sell 700 Launch-its and 300 Treat-times during his first month of operations (June).

Jake's financial goal is to earn an operating income of $5,000 per month. He believes volume may grow at a rate of 5% a month.

1a)

What are the breakeven number of units to sell assuming Jake only sells either Product #1 (Launch-its) OR Product #2 (Treat -times).

b)

Prepare a pro forma CM Income Statement by product line for the month of June. HINT: On product line income statements such as this, the fixed costs are only listed in the total column. Make sure you also show the totals for all other line items. Calculate the overall WACM% for the company.

c)

Calculate the CM per bundle and weighted average contribution margin (WACM) per unit.

d)

Use the CM per bundle to calculate the TOTAL number of bundles needed to breakeven. Calculate the number of EACH type of product needed to breakeven. Calculate the sales revenue associated with this volume for EACH product, and then the sales revenue to breakeven in total.

e)

Use the CM per bundle to calculate the total number of bundles needed to achieve Jake's target profit. Calculate the number of EACH type of product needed to achieve the target profit. Calculate sales revenue associated with this volume for EACH product, and then the sales revenue in total.