(b) The company's management would like to hold its fixed costs constant but shift its sales mix so that 60% of its revenue comes fromthe delivery of non-standardized boxes and the remainder from pouches and small boxes. If this were to occur, what would be thecompany's break-even sales, and what amount of sales would be provided by each service type? (Use Weighted-Average ContributionMargin Ratio rounded to 2 decimal places e.g. 0.22 and round final answers to O decimal places, e.g. 2,510.)Total break-even salesSale of mail pouches and small boxesSale of non-standardized boxes$%24%24 Wildhorse Delivery is a rapidly growing delivery service. Last year, 80% of its revenue came from the delivery of mailing "pouches" andsmall, standardized delivery boxes (which provides a 20% contribution margin). The other 20% of its revenue came from deliveringnon-standardized boxes (which provides a 70% contribution margin). With the rapid growth of Internet retail sales, Wildhorse believesthat there are great opportunities for growth in the delivery of non-standardized boxes. The company has fixed costs of $13,868,100.Sales mix is determined based upon total sales dollars.(a) What is the company's break-even point in total sales dollars? At the break-even point, how much of the company's sales areprovided by each type of service? (Use Weighted-Average Contribution Margin Ratio rounded to 2 decimal places e.g. 0.22 and round finalanswers to O decimal places, e.g. 2,510.)Total break-even sales$Sale of mail pouches and small boxes24Sale of non-standard boxes$

Solution:- Given, Wildhorse Delivery is a rapidly growing delivery service. Last year, 80% of its…

(b) The company's management would like to hold its fixed costs constant but shift its sales mix so that 60% of its revenue comes from the delivery of non-standardized boxes and the remainder from pouches and small boxes. If this were to occur, what would be the company's break-even sales, and what amount of sales would be provided by each service type? (Use Weighted-Average Contribution Margin Ratio rounded to 2 decimal places e.g. 0.22 and round final answers to O decimal places, e.g. 2,510.) Total break-even sales Sale of mail pouches and small boxes $ Sale of non-standardized boxes %24 %24

(b) The company's management would like to hold its fixed costs constant but shift its sales mix so that 60% of its revenue comes from the delivery of non-standardized boxes and the remainder from pouches and small boxes. If this were to occur, what would be the company's break-even sales, and what amount of sales would be provided by each service type? (Use Weighted-Average Contribution Margin Ratio rounded to 2 decimal places e.g. 0.22 and round final answers to O decimal places, e.g. 2,510.) Total break-even sales Sale of mail pouches and small boxes $ Sale of non-standardized boxes %24 %24

Principles of Accounting Volume 2

19th Edition

ISBN:9781947172609

Author:OpenStax

Publisher:OpenStax

Chapter3: Cost-volume-profit Analysis

Section: Chapter Questions

Problem 10EB: Keleher Industries manufactures pet doors and sells them directly to the consumer via their web...

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Keleher Industries manufactures pet doors and sells them directly to the consumer via their web site. The marketing manager believes that if the company invests in new software, they will increase their sales by 10%. The new software will increase fixed costs by $400 per month. Prepare a forecasted contribution margin income statement for Keleher Industries reflecting the new software cost and associated increase in sales. The previous annual statement is as follows:
Global Reach, Inc., is considering opening a new warehouse to serve the Southwest region. Darnell Moore, controller for Global Reach, has been reading about the advantages of foreign trade zones. He wonders if locating in one would be of benefit to his company, which imports about 90 percent of its merchandise (e.g., chess sets from the Philippines, jewelry from Thailand, pottery from Mexico, etc.). Darnell estimates that the new warehouse will store imported merchandise costing about 16.78 million per year. Inventory shrinkage at the warehouse (due to breakage and mishandling) is about 8 percent of the total. The average tariff rate on these imports is 5.5 percent. Required: 1. If Global Reach locates the warehouse in a foreign trade zone, how much will be saved in tariffs? Why? (Round your answer to the nearest dollar.) 2. Suppose that, on average, the merchandise stays in a Global Reach warehouse for nine months before shipment to retailers. Carrying cost for Global Reach is 6 percent per year. If Global Reach locates the warehouse in a foreign trade zone, how much will be saved in carrying costs? What will the total tariff-related savings be? (Round your answers to the nearest dollar.) 3. Suppose that the shifting economic situation leads to a new tariff rate of 13 percent, and a new carrying cost of 6.5 percent per year. To combat these increases, Global Reach has instituted a total quality program emphasizing reducing shrinkage. The new shrinkage rate is 7 percent. Given this new information, if Global Reach locates the warehouse in a foreign trade zone, how much will be saved in carrying costs? What will the total tariff-related savings be? (Round your answers to the nearest dollar.)
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Connelly Incorporated, a manufacturer of quality electric ice cream makers, has experienced a steady growth in sales over the past few years. Because her business has grown, Jan DeJaney, the president, believes she needs an aggressive advertising campaign next year to maintain the company’s growth. To prepare for the growth, the accountant prepared the following data for the current year: Variable costs per ice cream maker Direct labor $ 13.50 Direct materials 14.50 Variable overhead 6.00 Total variable costs $ 34.00 Fixed costs Manufacturing $ 82,500 Selling 42,000 Administrative 356,000 Total fixed costs $ 480,500 Selling price per unit $ 67.00 Expected sales (units) 30,000 If the additional $200,000 is spent for advertising in the next year, what is the sales level (in units) needed to equal the current year’s operating profit at 30,000 units?
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