The Rocky Mountain Catering Company specializes in preparing Mexican dinners that it freezes and ships to restaurants. When a restaurant orders an item, the restaurant heats and serves it. The budget data for 20x5 are:

Chicken TacosBeef Enchiladas

$$

Selling Price to restaurants5.007.00

Variable expenses3.004.00

Contribution Margin2.003.00

Number of units250,000125,000

The company prepares the items in the same kitchens and delivers them in the same trucks. Therefore, decisions about the individual products do not affect the fixed costs of $735,000.

Required:

(a)Compute the planned net income for 20x5.(2 marks)

(b)Compute the break-even point in units, assuming that the company maintains its planned sales mix.(3 marks)

(c)How can profits be maximizedthrough the use of sales mix?(5 marks)

(d)What are the benefits to be derived from achieving a lower break-even point?

(5 marks)