Question
Bonbons Ronds is a wholesaler of sweets. The company distributes its products to grocery stores, convenience stores and pharmacies in a large metropolitan area. Management
Bonbons Ronds is a wholesaler of sweets. The company distributes its products to grocery stores, convenience stores and pharmacies in a large metropolitan area. Management wants to plan operations for the next fiscal year. Here is the data relating to the fiscal year just ended: Average selling price (per box) $ 4.00
Average variable costs (per box): Cost of purchasing candy (per box): $ 2.00 Selling fee (per box): $ 0.40 Total (per box): $ 2.40
Total annual fixed costs Selling fees: $ 160,000 Administration costs: $ 280,000 Total: $ 440,000
Actual sales for the year (390,000 boxes) $ 1,560,000 Net income $ 110,400 Tax rate 40%
Work to do a) What is the breakeven point (in boxes of candies and in sales dollars) of Bonbons Ronds for the fiscal year which has just ended? b) What is the safety margin (in boxes of candy and in sales dollars) for the same fiscal year? c) Determine the number of boxes of candies that the company Bonbons Ronds could have sold this year for a net profit of $ 240,000.
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