Answered step by step
Verified Expert Solution
Link Copied!

Question

1 Approved Answer

Ivanhoe Delivery is a rapidly growing delivery service. Last year, 80% of its revenue came from the delivery of mailing pouches and small, standardized delivery

Ivanhoe Delivery is a rapidly growing 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). With the rapid growth of Internet retail sales, Ivanhoe believes that there are great opportunities for growth in the delivery of non-standardized boxes. The company has fixed costs of $13,758,900. Sales mix is determined based upon total sales dollars. (a) What is the company's break-even point in total sales dollars? At the break-even point, how much of the company's sales are provided by each type of service? (Use Weighted-Average Contribution Margin Ratio rounded to 2 decimal places e.g. 0.22 and round final answers to O decimal places, e.g. 2,510.) Total break-even sales Sale of mail pouches and small boxes Sale of non-standard boxes +A $ (b) The company's management 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. If this were to occur, what would be the company's break-even sales, and what amount of sales would be provided by each service type? (Use Weighted-Average Contribution Margin Ratio rounded to 2 decimal places e.g. 0.22 and round final answers to O decimal places, e.g. 2,510.) Total break-even sales Sale of mail pouches and small boxes $ +A $ Sale of non-standardized boxes $

Step by Step Solution

There are 3 Steps involved in it

Step: 1

blur-text-image

Get Instant Access to Expert-Tailored Solutions

See step-by-step solutions with expert insights and AI powered tools for academic success

Step: 2

blur-text-image_2

Step: 3

blur-text-image_3

Ace Your Homework with AI

Get the answers you need in no time with our AI-driven, step-by-step assistance

Get Started

Recommended Textbook for

More Books

Students also viewed these Accounting questions