DYLSA, a candy distribution company that serves grocery stores, supermarkets and pharmacies in a wide area of the city, has experienced continuous growth in sales over the last few years, even when the prices of sweets have increased.

You are preparing your planning for next year and you are presented with the data that was used to project the $1,104,000 of net income that you wish to have:

Expected annual sales volume: (390,000 boxes at $40) $15,600,000

Candy manufacturers have announced that they will increase the prices of their products by 15% next year, as a result of increases in raw materials (sugar, cocoa, peanuts, etc.).

Using the above data, determine:

a) What is the break-even point in boxes of candy for the year without the increase in prices?

b) What selling price per box should cover the 15% increase in the cost of candy and still maintain the percentage contribution margin?

c) What sales volume must the company achieve in the next year to maintain the same projected net profit, if the selling price of candy remains at $40 per box and the cost of candy increases by 15%?

Write the corresponding formula to use and clearly identify the final answers to each problem and each section with its respective procedure.

Sale Price: $40 per box Variable Costs Cost of candy: $20 per box Sales expense: $4 Annual Fixed Expenses Sale: $1,600,000 Administration: $2,800,000 Tax rate: 40%