All$-$Day Candy Company is a wholesale distributor of candy. The company services grocery, convenience, and

drugstores in a large metropolitan area.

Small but steady growth in sales has been achieved by the All$-$Day Candy Company over the past few

years while candy prices have been increasing. The company is formulating its plans for the coming fiscal year

January $1,2021$ to December $31,2021.$ Presented below are the data used to project the current year's $($January $1,$

$2020$ to December $31,2020)$ operating income of $$184,000.$

Average selling price

$$4,00$ per box

Average variable expenses

Direct materials

$$2\mathrm{.}00$ per box

Selling expenses

Total

$${0\mathrm{.}40}_{?}$ per box

Annual fixed expenses

Expected annual sales volume $(390,000$ boxes$)$

$$1,560,000$

Manufacturers of direct materials have announced that they will increase prices of their products an

average of $15$ percent in the coming year due to increases in materials and labor expenses. All$-$Day Candy

Company expects that all other expenses will remain at the same rates or levels as the current year.

REQUIRED

What is All$-$Day Candy Company's breakeven point in boxes of candy for the current year?

What selling price per box must All$-$Day Candy Company charge to cover the $15$ percent increase in

the cost of direct materials and still maintain the current average contribution margin per box?

What volume of sales in boxes must the All$-$Day Candy Company achieve in the coming year in order

to maintain the same operating income $($$$184,000)$ as projected for the current year if the selling price

remains at $$4\mathrm{.}00$ per box and the cost of direct materials increases $15$ percent?

All$-$Day Candy is considering adding a new product line, Taco Chips, to their range of

products. They expect that these would sell for $$6\mathrm{.}00$ for a box and would have manufacturing

cost of $$3\mathrm{.}00$ have selling costs of $$1\mathrm{.}00$ per box. There would be no additional fixed costs.

They expect that this new product would be about $10\%$ of their sales volume in boxes in the

coming year. What volume of sales in boxes of candy and chips must the All$-$Day Couscous

Company achieve in the coming year to maintain the same operating income as projected for

the current year if the selling price of candy remains at $$4\mathrm{.}00$ per box and the cost of direct

materials increases $15$ percent as in part $3?$ Briefly explain the reason for the difference in the

total volume in parts $3$ and $4.$