Answered step by step
Verified Expert Solution
Question
1 Approved Answer
Oriole Candy Company is a wholesale distributor of candy. The company services grocers, convenience stores and drugstores in a large metropolitan area. Oriole Candy Company
Oriole Candy Company is a wholesale distributor of candy. The company services grocers, convenience stores and drugstores in a large metropolitan area. Oriole Candy Company has achieved small but steady growth in sales over the past few years, but costs have also been increasing. The company is formulating its plans for the coming fiscal year. The following data were used to project the current year's after-tax operating income of $368,448: $8.00 per box Average selling price Average variable costs Cost of candy $4.00 per box Selling expenses 0.80 per box Total $4.80 per box Annual fixed costs Selling $352,000 Administrative 738,800 Total $1,090,800 The expected annual sales volume (858,000 boxes) is $6,864,000 and the tax rate is 40%. Candy manufacturers have announced that they will increase the prices of their products by an average of 15% in the coming year because of increases in raw material (sugar, cocoa, peanuts, and so on) and labour costs. Oriole Candy Company expects that all other costs will remain at the same rates or levels as during the current year. (a) Your answer is correct. Calculate Oriole Candy Company's break-even point in boxes of candy for the current year. Break-even point 340875 units e Textbook and Media Attempts: 1 of 2 used (b) X Your answer is incorrect. Calculate the selling price per box that Oriole Candy Company must charge to cover the 15% increase in the variable cost of candy and still maintain the current contribution margin ratio. (Round answer to 2 decimal places, eg. 1.25.) Selling price per box $ 11.33 eTextbook and Media Attempts: 2 of 2 used (c) Your answer is incorrect. Calculate the volume of sales in dollars that Oriole Candy Company must achieve in the coming year to keep the same operating income after taxes that was projected for the current year if the selling price of candy remains at $8.00 per box and the cost of candy increases by 15%. (Round contribution margin ratio to 2 decimal places, eg. 15.25% and final answer to O decimal places, e.g. 125.) Volume of sales to be maintained $ e Textbook and Media Save for Later Attempts: 1 of 2 used Submit
Step by Step Solution
There are 3 Steps involved in it
Step: 1
Get Instant Access to Expert-Tailored Solutions
See step-by-step solutions with expert insights and AI powered tools for academic success
Step: 2
Step: 3
Ace Your Homework with AI
Get the answers you need in no time with our AI-driven, step-by-step assistance
Get Started