Question 2 Sunland, Inc., sells two types of water pitchers, plastic and glass.
ID: 2331043 • Letter: Q
Question
Question 2 Sunland, Inc., sells two types of water pitchers, plastic and glass. Plastic pitchers cost the company $16 and are sold for $31. Glass pitchers cost $25 and are sold for $46. All other costs are fixed at $1,572,480 per year. Current sales plans call for 22,400 plastic pitchers and 67,200 glass pitchers to be sold in the coming year. How many pitchers of each type must be sold to break even in the coming year? (Use contribution margin per unit to calculate breakeven units.) Plastic pitchers Glass pitchers Click if you would like to Show Work for this question: Open Show WorkExplanation / Answer
Answer
---Working---
Working
Plastic Pitchers
Glass Pitchers
Total
A
Current Sales
22,400
67,200
89,600
B = A/89600
Sales Mix %
25%
75%
100%
C
Sales price per unit
$ 31.00
$ 46.00
D
Variable cost per unit
$ 16.00
$ 25.00
E = C - D
Contribution margin per unit
$ 15.00
$ 21.00
F = E x B
Weighted Average Contribution per unit
$ 3.75
$ 15.75
$ 19.50 [to be used below]
---Answer---
A
Total Fixed Cost
$ 1,572,480.00
B
Weighted Average Contribution per unit
$ 19.50
C = A/B
Total Break Even Units
80,640
D = C x 25%
Plastic Pitcher Break Even [25%]
20,160
E = C x 75%
Glass Pitcher Break Even [75%]
60,480
----Answer: Part #1
Working
Plastic Pitchers
Glass Pitchers
A
Sales price per unit
$ 31.00
$ 46.00
B
Variable cost per unit
$ 14.00
$ 25.00
C = A - B
Contribution margin per unit
$ 17.00
$ 21.00
---Working: Part #2-----
Working
Plastic Pitchers
Glass Pitchers
Total
A
Current Sales
22,400
67,200
89,600
B = A/89600
Sales Mix %
25%
75%
100%
C
Sales price per unit
$ 31.00
$ 46.00
D
Variable cost per unit
$ 14.00
$ 25.00
E = C - D
Contribution margin per unit
$ 17.00
$ 21.00
F = E x B
Weighted Average Contribution per unit
$ 4.25
$ 15.75
$ 20.00 [to be used below]
---Answer: part #2---
A
Total Fixed Cost
$ 1,572,480.00
B
Contribution margin per unit
$ 20.00
C = A/B
Total Break Even Units
78,624
D = C x 25%
Plastic Pitcher Break Even [25%]
19,656
E = C x 75%
Glass Pitcher Break Even [75%]
58,968
Working
Plastic Pitchers
Glass Pitchers
Total
A
Current Sales
22,400
67,200
89,600
B = A/89600
Sales Mix %
25%
75%
100%
C
Sales price per unit
$ 31.00
$ 46.00
D
Variable cost per unit
$ 16.00
$ 25.00
E = C - D
Contribution margin per unit
$ 15.00
$ 21.00
F = E x B
Weighted Average Contribution per unit
$ 3.75
$ 15.75
$ 19.50 [to be used below]
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