Answered step by step
Verified Expert Solution
Question
1 Approved Answer
Question 1 (25 Marks) Delight Treats Limited, a supplier of donuts, sells two different types of six pack donuts - pineapple donuts and cherry
Question 1 (25 Marks) Delight Treats Limited, a supplier of donuts, sells two different types of six pack donuts - pineapple donuts and cherry donuts. The selling prices of these donuts are $650 for pineapple donuts and $750 for cherry donuts - which are usually in higher demand. The management of Delight Treats Limited consistently maintains a twenty-five (25%) contribution margin for each product sold and for the month of December 2019, the total fixed cost was $$88,070. In spite of the current pandemic, management is planning to sell 1,500 boxes of pineapple donuts and 1,800 boxes of cherry donuts. Required: a) Calculate the break-even point (units of each product and total). (9 marks) b) Calculate the break-even point in dollars (total revenues). (3 marks) c) Calculate how many units (of each and in total) should be sold to achieve a target income of $86,308.60 before tax. (3 marks) d) Calculate how many units (of each and in total) should be sold to achieve a target income of $53,546.56 after tax, tax rate is 20%. (6 marks) F e) State two (2) limitations of CVP analysis. (4 marks)
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