Question
Spring Farms grows and sells strawberries, blueberries, raspberries, and blackberries.Annual fixed costs are $325,000.Variable costs are $0.75 per pint of strawberries, $0.87 per pint of
Spring Farms grows and sells strawberries, blueberries, raspberries, and blackberries.Annual fixed costs are $325,000.Variable costs are $0.75 per pint of strawberries, $0.87 per pint of blueberries, $0.95 per pint of raspberries, and $0.43 per pint of blackberries.Strawberries sell for $1.15 per pint, blueberries sell for $1.42 per pint, raspberries sell for $1.55 per pint, and blackberries sell for $0.95 per pint.Five pints of strawberries are produced and sold for every three pints of blueberries, two pints of raspberries, and one pint of blackberries.
a.What is Spring's weighted average contribution margin?Show your work.
b.For the expected product mix, how many pints does Spring need to sell next year to achieve a pretax target profit of $55,000?Show your work.
c.Spring effective tax rate is 30%.For the expected product mix, how many pints must Spring sell to achieve an after-tax target profit of $75,000?Show your work.
d.Suppose Spring has a bumper crop of raspberries, resulting in four pints of raspberries produced and sold for every three pints of strawberries, every two pints of blueberries produced and sold, and every pint of blackberries.How many pints must Spring sell to achieve break-even at this product mix?Show your work.
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