Chapter 20 - Break Even DB #9

Assume that a gourmet food manufacturer has considered renting a booth at a local mall to sell gift boxes of candy, nuts, and cookies during the holiday season. The fixed costs to rent and operate the booth would be $26,550. The unit contribution margins and sales mix anticipated by the company are as follows:

Unit Contribution Margin Sales Mix

Candy $1.25 50%

Nuts $2.00 30%

Cookies $1.25 20%

What would be the weighted average contribution margin? Show your calculation.

To break even, the company would need to sell _______ gift boxes (show your calculation). Then after determining how many boxes are needed, what would be the breakout (sales mix) per each item (candy, nuts, cookies)?