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The Northwest Catering Company specializes in preparing tasty meals that are frozen and shipped to various restaurants in the Seattle Area. Currently, the company offers

The Northwest Catering Company specializes in preparing tasty meals that are frozen and shipped to various restaurants in the Seattle Area. Currently, the company offers two different meal options. More options are planned in the future. The company prepares the meals on a daily basis and ships them via truck to customers. The delivery cost is the same regardless of the number of units shipped . The companys bookkeeper prepared the following cost analysis:

Product

Smoked Salmon Pizza

Oyster and Octopus Pasta

Selling Price

$7.00

$9.00

Variable Cost

4.00

6.00

Estimated number of units sold

250,000

150,000

Sales Mix

62.5%

37.5%

Summary of Fixed Costs

Description

Amount

Truck Delivery Charges

125,800

Factory Rental

250,000

Depreciation on Equipment

150,000

Salaries for Factory Workers

240,000

Officer Salaries

300,000

Advertising

254,200

Required

1. Assuming that all units are sold, compute the company net income for the year.

2. Assuming that the sales mix remains constant, compute the breakeven point. Round the sales mix percentage to 4 decimal places. (ex. 10.1234)

3. The Oyster and Octopus Pasta has not been as popular as expected. However, the smoked salmon pizza has been a hit. During the current period, the company sold 99,000 Oyster and Octopus Pasta Meals and 297,000 Smoked Salmon Meals. Compute the net income based upon the actual unit sales.

4. These sales mix percentage relationships are expected to continue throughout the upcoming year. Based on the original information, compute the expected income for the upcoming year assuming the following changes will occur:

Total Fixed Costs will decrease by 5%

The variable cost per unit for each product will increase by 25%

The selling price per unit will increase by 20%

Total Unit Sales will increase by 5%

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