*Numbers are provided in screenshot*

What effect will a $0.25 price reduction in Bison Bites have on Salty Pawzs break-even point? Assume that the product sales mix changes as shown in Table 1.

Income Statement					Table 1.
Based on 14,000 units sold					Party Pooch		45%
	Current Price	Price & Mix Change	Change		Chicken Cuties		13%
INCOME:					Bison Bites		10%
Party Pooch					Lamb Lovies		32%
Chicken Cuties
Bison Bites
Lamb Lovies
TOTAL INCOME:
COST OF GOODS SOLD:
Party Pooch
Chicken Cuties
Bison Bites
Lamb Lovies
Total cost of sales
GROSS PROFIT
OPERATING EXPENSES:
Rent
Electricity
Telephone
Water /Sewer
Internet
Website
Salaries
Owner's Draw
Office Supplies
Loan Payment
Insurance
Other
TOTAL EXPENSES
NET INCOME
BEFORE TAXES

1. What effect will this price reduction have on Salty Pawzs break-even point? Assume that the product sales mix remains unchanged. (Tip: Remember that because Bison Bites are included in the Party Pooch, the price change on Bison Bites would also affect the sales price of the Party Pooch.)
2. If Wanda reduces the price on the Bison Bites to $1.50, she believes it will cause customers buying Chicken Cuties to switch to the Bison Bites. The revised product mix is provided in the table below. What is the effect on Wandas break-even point if she reduces the bison product price and customers buy more Bison Bites and fewer Chicken Cuties? (Tip: Remember that because Bison Bites are included in the Party Pooch, the price change on Bison Bites would also affect the sales price of the Party Pooch.)
3. In addition to the numbers, provide Wanda with a written explanation of the changes to her break-even point under both of the scenarios presented.

What effect will a $0.25 price reduction in Bison Bites have on Salty Pawz's break-even point? Assume that the product sales mix remains unchanged. 1 2 Income Statement 3 Based on 14,000 units sold 14000.00 4 Current Price Reduced Price % of Sale New % of Sales 5 INCOME: Party Pooch 0.45 0.45 6 Party Pooch $ 20 $ 19 Chicken Cuties 0.18 0.13 7 Chicken Cuties $ 15 $ 15 Bison Bites 0.05 0.10 8 Bison Bites $ 21 $ 18 Lamb Lovies 0.32 0.32 9 Lamb Lovies 24 $ 24 10 TOTAL INCOME: $ 286,020 $ 277,620 Total Income = price* units sold *% of Sale 11 Weighted Reduce Price Weighted Weight for Reduce Price 12 COST OF GOODS SOLD: Contribution-Current Contribution - Reduce Profit Margin Profit Margin Profit Margin Profit Margin & New Mix 13 Party Pooch $ 10.40 $ 10.40 $ 9.60 $ 8.60 48.00% 21.60% 45.26% 20.37% 20.37% 14 Chicken Cuties $ 7.80 $ 7.80 $ 7.20 $ $ 7.20 48.00% 8.64% 48.00% 8.64% 6.24% 15 Bison Bites $ 10.80 $ 10.80 $ 10.20 $ 7.20 48.57% 2.43% 40.00% 2.00% 4.00% 16 Lamb Lovies $ 12.60 $ 12.60 $ 11.40 $ 11.40 47.50% 15.20% 47.50% 15.20% 15.20% 17 Total cost of sales $ 149.184 $ 149, 184 Cost of Good Sold = Cost * unit Sold * % of sale 47.87% 46.21% 45.81% 18 19 GROSS PROFIT $ 136,836 $ 128,436 20 Units Dollars 21 OPERATING EXPENSES: Breakeven Current Reduce Price New Mix & Reduce Price Current Reduce Price New Mix & Reduce Price 22 Rent $ $ Party Pooch 23 Electricity $ Chicken Cuties 24 Telephone $ 100 $ 100 Bison Bites 25 Water /Sewer $ $ Lamb Lovies 26 Internet $ 60 $ 60 27 Website $ 175 $ 175 28 Salaries $ $ 29 Owner's Draw $ 1,000 $ 1,000 30 Office Supplies $ 50 $ 50 31 Loan Payment $ $ 32 Insurance $ 85 $ 85 33 Other $ $ 34 TOTAL EXPENSES $ 1,470 $ 1,470 35 36 NET INCOME 37 BEFORE TAXES $ 135,366.00 $ 126,966.00 38 15.1 Break Even Analysis 15.1 Break Even Analysis II + What effect will a $0.25 price reduction in Bison Bites have on Salty Pawz's break-even point? Assume that the product sales mix remains unchanged. 1 2 Income Statement 3 Based on 14,000 units sold 14000.00 4 Current Price Reduced Price % of Sale New % of Sales 5 INCOME: Party Pooch 0.45 0.45 6 Party Pooch $ 20 $ 19 Chicken Cuties 0.18 0.13 7 Chicken Cuties $ 15 $ 15 Bison Bites 0.05 0.10 8 Bison Bites $ 21 $ 18 Lamb Lovies 0.32 0.32 9 Lamb Lovies 24 $ 24 10 TOTAL INCOME: $ 286,020 $ 277,620 Total Income = price* units sold *% of Sale 11 Weighted Reduce Price Weighted Weight for Reduce Price 12 COST OF GOODS SOLD: Contribution-Current Contribution - Reduce Profit Margin Profit Margin Profit Margin Profit Margin & New Mix 13 Party Pooch $ 10.40 $ 10.40 $ 9.60 $ 8.60 48.00% 21.60% 45.26% 20.37% 20.37% 14 Chicken Cuties $ 7.80 $ 7.80 $ 7.20 $ $ 7.20 48.00% 8.64% 48.00% 8.64% 6.24% 15 Bison Bites $ 10.80 $ 10.80 $ 10.20 $ 7.20 48.57% 2.43% 40.00% 2.00% 4.00% 16 Lamb Lovies $ 12.60 $ 12.60 $ 11.40 $ 11.40 47.50% 15.20% 47.50% 15.20% 15.20% 17 Total cost of sales $ 149.184 $ 149, 184 Cost of Good Sold = Cost * unit Sold * % of sale 47.87% 46.21% 45.81% 18 19 GROSS PROFIT $ 136,836 $ 128,436 20 Units Dollars 21 OPERATING EXPENSES: Breakeven Current Reduce Price New Mix & Reduce Price Current Reduce Price New Mix & Reduce Price 22 Rent $ $ Party Pooch 23 Electricity $ Chicken Cuties 24 Telephone $ 100 $ 100 Bison Bites 25 Water /Sewer $ $ Lamb Lovies 26 Internet $ 60 $ 60 27 Website $ 175 $ 175 28 Salaries $ $ 29 Owner's Draw $ 1,000 $ 1,000 30 Office Supplies $ 50 $ 50 31 Loan Payment $ $ 32 Insurance $ 85 $ 85 33 Other $ $ 34 TOTAL EXPENSES $ 1,470 $ 1,470 35 36 NET INCOME 37 BEFORE TAXES $ 135,366.00 $ 126,966.00 38 15.1 Break Even Analysis 15.1 Break Even Analysis II +