Question
Mountain Maples is a mail-order nursery dedicated to growing, selling, and shipping beautiful Japanese Maple trees. Located on a ridge-top in Mendocino County, northern California,
Mountain Maples is a mail-order nursery dedicated to growing, selling, and shipping beautiful Japanese Maple trees. Located on a ridge-top in Mendocino County, northern California, Mountain Maples offers two distinctive types of Japanese Maples: Butterfly and Moonfire. The trees are sold after five growing seasons, and revenue and cost data for each tree type (for the most recent year) are as follows:
2
Quantity sold Selling price per tree Variable cost per tree
Butterfly Moonfire
800 1,600 $200 $100 $100 $50
Mountain Maples' fixed costs for the most recent year were $75,000.
Required:
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How many Japanese Maples must Mountain Maples sell in a year to break even? At this sales volume, how many Butterfly and Moonfire trees are sold?
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At the current product mix, how many Butterfly trees must Mountain Maples sell in a year to earn a profit of $50,000?
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Assume that Mountain Maples product mix changes to 50% Butterfly and 50% Moonfire. How does this information change your answer to part (a)?
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