Answered step by step
Verified Expert Solution
Link Copied!

Question

00
1 Approved Answer

Best Farm sells cat food and dog food. Its monthly fixed costs average $400,000. Cat food sales represent 80% of the company's total revenue. Dog

Best Farm sells cat food and dog food. Its monthly fixed costs average $400,000. Cat food sales represent 80% of the company's total revenue. Dog food sales constitute the remaining 20%. The company has provided the following information expressed on a per-case basis:

Sales

Conribution Conribution

Sales

Margin

Price

Margin Margin %

Share %

Mix

Cat Food

50

15

Dog Food

30

6

Calculate: (show your calculations and round to 2 decimal places)

  1. What is the Average Contribution Margin Ratio?
  2. What is the total monthly Sales Revenue in Dollars required to break-even?
  3. What is is the total monthly Sales Revenue required to earn an Operating Income of $135,000?
  4. What is the companys Margin of Safety at a monthly Sales level of $2,500,000?
  5. If monthly fixed costs increase by $10,000, the break-even point, expressed in sales dollars, will increase to how many dollars?
  6. How does break-even sales in (E) with increased fixed costs change if the product mix changes to 50% / 50%. The new break-even point in $ is?

Step by Step Solution

There are 3 Steps involved in it

Step: 1

blur-text-image

Get Instant Access with AI-Powered 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

Students also viewed these Accounting questions

Question

Draw a picture consisting parts of monocot leaf

Answered: 1 week ago