Answered step by step
Verified Expert Solution
Link Copied!

Question

1 Approved Answer

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

image text in transcribed

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)

Step by Step Solution

There are 3 Steps involved in it

Step: 1

blur-text-image

Get Instant Access to Expert-Tailored Solutions

See step-by-step solutions with expert insights and AI powered tools for academic success

Step: 2

blur-text-image

Step: 3

blur-text-image

Ace Your Homework with AI

Get the answers you need in no time with our AI-driven, step-by-step assistance

Get Started

Recommended Textbook for

Company Accounting

Authors: Ken Leo, Jeffrey Knapp, Susan McGowan, John Sweeting

11th Edition

0730344770, 9780730344773

More Books

Students also viewed these Accounting questions