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Roadrunner Ltd sells biscuits in boxes to supermarkets throughout the country. In the financial year ended 30 June 2021, the company sold a total of
Roadrunner Ltd sells biscuits in boxes to supermarkets throughout the country. In the financial year ended 30 June 2021, the company sold a total of 500,000 boxes of biscuits at $4 per box. The gross profit margin achieved on these sales was 75%. Operating expenses consisted of the following: Advertising Staff salaries Other administrative expenses $ 100,000 500,000 600,000 Cost of sales are considered as variable costs, and all other expenses are treated as fixed costs. f) Roadrunner Ltd is also considering introducing a Low Sugar variety of its biscuits. The Low Sugar" biscuits will sell for $4.50 per box. As the "Low Sugar" biscuits will involve adding artificial sweeteners which are more expensive than regular sugar, variable cost will increase by $0.30 per box. Fixed cost will increase by $20,000 due to production and administrative changes. The sales mix is expected to be 30% normal ("Regular Sugar") biscuits milk and 70% "Low Sugar" biscuits. Calculate: (i) the weighted average contribution margin (WACM)
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