Question
Archer's Beanery is a locally owned specialty food product company in Northeast Ohio that has been in existence for over 30 years. Its products include
Archer's
Beanery is a locally owned specialty food product company in Northeast Ohio that has been in existence for over 30 years. Its products include flavored coffees and teas, dips, dressings, sauces, and seasonings.
(Click the icon to view additional information.)
Each of the shows that
Archer's
attends has a different booth rental fee. Booth rental fees can range from
$700
to
$5,000
for each show. Assume that the booth rental fee at the Great Big Home + Garden Show is
$2,375
for the
five-day
show and that
Archer's
has an average contribution margin ratio of
25%
on its products.Read the requirements
.
Requirement 1. How much in sales does
Archer's
need to break even on the Great Big Home + Garden Show, assuming that the booth rental fee is the only fixed cost of the show?
Identify the formula and then compute the breakeven point in dollars. (Complete all answer boxes. Enter a "0" for any zero amounts. Enter ratios, if any, as a decimal to two places, X.XX.)
Breakeven sales | ||||||||
( | Fixed expenses | + | Operating income | ) | Contribution margin ratio | = | in dollars | |
( | + | ) | = |
|
Requirement 2. The Great Big Home + Garden Show runs for
five
days. How much, on average, must
Archer's
sell each day of the show to break even?
Archer's must sell | 0 | each day to break even. |
Requirement 3. Assume that
75,000
people visit the home and garden show each year spread evenly throughout the
five-day
period. If
8%
of the attendees purchase from
Archer's
at the show, how much must each customer purchase from
Archer's
for the company to break even on the booth rental fee?
Identify the formula and then compute the purchase amount needed per customer. (Round your answer to the nearestcent.)
Breakeven sales in dollars | Total number of customers | = | Purchase amount per customer | ||
= |
Requirement 4. Assume now that
Archer's
wants to make a target profit of
$2,500
for the Great Big Home + Garden Show. What sales volume will allow
Archer's
to achieve this target profit?
Archer's sales volume must be | 0 | to achieve the target profit. |
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