Question
Ex delivery service. Last year, 80% of its revenue came from the delivery of mailing pouches and small, standardized delivery boxes (which provides a 20%
Ex delivery service. Last year, 80% of its revenue came from the delivery of mailing pouches and small, standardized delivery boxes (which provides a 20% contribution margin). The other 20% of its revenue came from delivering non-standardized boxes which provides a 70% contribution margin. Express believes that there are great opportunities for growth in the delivery of non-standardized boxes. The company has fixed costs of $13,152,000. (a) What is the companys break-even point in total sales dollars? At the break-even point, how much of the companys sales are provided by each type of service?
Total break-even sales | ? | |
---|---|---|
Sale of mail pouches and small boxes | ||
Sale of non-standard boxes |
(b) The company would like to hold its fixed costs constant but shift its sales mix so that 60% of its revenue comes from the delivery of non-standardized boxes and the remainder from pouches and small boxes. what would be the companys break-even sales and what amount of sales would be provided by each service type?
Total break-even sales |
| |
---|---|---|
Sale of mail pouches and small boxes |
| |
Sale of non-standardized boxes |
|
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