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Delight Treats Limited, a supplier of donuts, sells two different types of six pack donuts - pineapple donuts and cherry donuts. The selling prices
Delight Treats Limited, a supplier of donuts, sells two different types of six pack donuts - pineapple donuts and cherry donuts. The selling prices of these donuts are $650 for pineapple donuts and $750 for cherry donuts - which are usually in higher demand. The management of Delight Treats Limited consistently maintains a twenty-five (25%) contribution margin for each product sold and for the month of December 2019, the total fixed cost was $$88,070. In spite of the current pandemic, management is planning to sell 1,500 boxes of pineapple donuts and 1,800 boxes of cherry donuts. Required: a) b) c) Calculate the break-even point (units of each product and total). (9 marks) Calculate the break-even point in dollars (total revenues). (3 marks) Calculate how many units (of each and in total) should be sold to achieve a target income of $86,308.60 before tax. (3 marks) d) Calculate how many units (of each and in total) should be sold to achieve a target income of $53,546.56 after tax, tax rate is 20%. (6 marks) State two (2) limitations of CVP analysis. (4 marks) e)
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