Question

Telsa’s makes two types of Mud Pies Chocolate and Peanut. The chocolate sells for $10 and the Peanut sells for $15. The variable costs for chocolate are $6 and the variable costs for peanut are $9. The sales mix is 60% chocolate and 40% Peanut. The fixed costs for the month are $50,000. Calculate the breakeven volume and revenue per type of pie.

Answer 1

• Working

		Chocolate	Peanut	Total
A	Sale price per unit	$10	$15
B	Variable cost per unit	$6	$9
C = A - B	Contribution margin per unit	$4	$6
D	No if units	6	4	10
E = D/500	Sales Mix % of total seats	60%	40%
F = C x E	Weighted average contribution margin per unit	$2.40	$2.40	$4.80

A	Total Fixed Cost	$50,000
B	Weighted average contribution margin per unit	$4.80
C = A/B	Break even point in number of seats	10416.66667	Answer [1]

• Breakeven Volume – TOTAL = 10416.67 units

		Chocolate	Peanut	Total
A	Break even point in number of seats	10416.66667	10416.66667
B	Sales Mix % of total seats	60%	40%
C = A x B	Break even VOLUME	6250	4166.666667	10416.66667
D	Sale price per unit	$10	$15
E = C x D	Break even point REVENUE	$62,500	$62,500	$125,000