A company can sell 25,000 tarts at $4.50 and 225,000 doughnuts at $1. What's the break-even...

A company can sell 25,000 tarts at $4.50 and 225,000 doughnuts at $1. What's the break-even point in unit and sales dollars for each? Fixed costs are $125,000. Variable costs are .40 for doughnuts and $1.80 for tarts.

Solutions

Expert Solution

All working forms part of the answer
Question requires calculation of Weighted Average Contribution mArgin
Working

	Tarts	Doughnuts
Sale Price	4.5	1
Variable cost	1.8	0.4
Contribution Margin	2.7	0.6
Units [total = 250000]	25000	225000
% of total mix of 250000 units	10%	90%

	Tarts	Doughnuts	Total
Units	25000	225000	250000
Total contribution margin	[25000 x 2.7] 67500	[225000 x 0.6] 135000	202500

Total contribution	202500
Total units	250000
Weighted Average contribution margin per unit	0.81

Break Even calculation

A	Total Fixed Cost	125000
B	Weighted Average contribution margin	0.81
C=A/B	Break Even point in Units	154321
D=10% of C	Tarts 10%	15432
E=90% of C	Doughnuts 90%	138889

	Break Even units (A)	Sale Price (B)	Break Even in Sales Dollars (A x B)
Tarts	15432	4.5	69444
Doughnuts	138889	1	138889

ekkarill92 answered 1 year ago

Next > < Previous

Related Solutions

1. If a company cannot sell enough to break even, what are the options? All of...

1. If a company cannot sell enough to break even, what are the options? All of these are valid options Pull the plug Attempt to raise sales price Try to reduce variable costs Search for someone else to make it for you Try to reduce fixed costs None of the above Mcq choose 1

1. ABC Company must sell 1,000 units to break even with its current contribution margin of...

1. ABC Company must sell 1,000 units to break even with its current contribution margin of $.50 per unit. How will breakeven change if the contribution margin increases? A. The number of units needed to break even will decrease. B. The number of units needed to break even will increase. C. The number of units needed to break even will remain the same. D. There is not enough information to know how break even units will change. 2. Segment margin...

"What's the problem?" “The president wanted to know the break-even point for each of the company’s...

"What's the problem?" “The president wanted to know the break-even point for each of the company’s products, but I am having trouble figuring them out.” “I’m sure you can handle it, Cheryl. And, by the way, I need your analysis on my desk tomorrow morning at 8:00 sharp in time for the follow-up meeting at 9:00.” Piedmont Fasteners Corporation makes three different clothing fasteners in its manufacturing facility in North Carolina. Data concerning these products appear below: Velcro Metal Nylon...

Explain break-even analysis, its purpose, and whether break-even analysis can be used in manufacturing and/or service...

Explain break-even analysis, its purpose, and whether break-even analysis can be used in manufacturing and/or service industry.

1. What is a firm’s break-even price?

1. What is a firm’s break-even price?A) The minimum average total cost.B)The minimum average fixed cost.C)The minimum average variable cost.D) Any market price.2. In the short run, a firm will continue to sell its product as long as:A) it is making a positive profit.B) the price is greater than average total costs.C) the price is greater than average variable costs.D) its marginal cost is increasing.3. In the short run, fixed costs:A) are an important feature in a firm's decision to...

1. Given the following, depict fully and explain break-even in units, break-even in dollars, total revenue...

1. Given the following, depict fully and explain break-even in units, break-even in dollars, total revenue line, total cost line, fixed cost line, break-even point, etc. Fixed Cost: $120,000 Sales per Unit: $15.00 Variable cost per Unit: $3.00 Include a discussion regarding sensitivity analysis for an inelastic product.

Shania performed a breakeven analysis and found that she must sell 1322 sweaters to break even....

Shania performed a breakeven analysis and found that she must sell 1322 sweaters to break even. She believes this to be impossible. What can she do? a. Use demand-based pricing. b. Raise her selling price. c. Increase her fixed costs. d. Increase her variable costs. What level of distribution intensity is best suited to convenience goods? a. shopping b. convenience c. exclusive d. open Rusty Post Winery has a total fixed cost of $700,000. Its variable cost for producing a...

Contribution Margin, Break-Even Units, Break-Even Sales, Margin of Safety, Degree of Operating Leverage Aldovar Company produces...

Contribution Margin, Break-Even Units, Break-Even Sales, Margin of Safety, Degree of Operating Leverage Aldovar Company produces a variety of chemicals. One division makes reagents for laboratories. The division's projected income statement for the coming year is: Sales (203,000 units @ $70) $14,210,000 Total variable cost 8,120,000 Contribution margin $6,090,000 Total fixed cost 4,945,500 Operating income $1,144,500 Required: 1. Compute the contribution margin per unit, and calculate the break-even point in units. Calculate the contribution margin ratio and use it to...

Multiple-Product Break-Even, Break-Even Sales Revenue Switzer Company produces and sells yoga-training products: how-to DVDs and a...

Multiple-Product Break-Even, Break-Even Sales Revenue Switzer Company produces and sells yoga-training products: how-to DVDs and a basic equipment set (blocks, strap, and small pillows). Last year, Switzer sold 10,000 DVDs and 5,000 equipment sets. Information on the two products is as follows: DVDs Equipment Sets Price $12 $15 Variable cost per unit 4 6 Total fixed costs are $70,000. Suppose that in the coming year, Switzer plans to produce an extra-thick yoga mat for sale to health clubs. The company...

1-Either one of two joint tenants can break a joint tenancy, even if the other tenant...

1-Either one of two joint tenants can break a joint tenancy, even if the other tenant objects to the dissolution of that joint tenancy. True False 2- No matter how severe the regulation of property, no compensation is due the owner under the exercise of police power. True False 3- Condemnation is the lay term for eminent domain. True False 4- If two brothers take title as A and B Jointly, they hold title in Join Teancy. True False 5-...

Subjects