Yumminess has asked Jordon and Taylor to consider making Extra Attack Brownies a
ID: 2422693 • Letter: Y
Question
Yumminess has asked Jordon and Taylor to consider making Extra Attack Brownies and Nutty Attack Brownies, in addition to Chocolate Attack Brownies. The selling price to Yumminess would be $12 and $14.50 per tin, respectively, compared to the original $10 for Chocolate Attach Brownies. In addition to the current fixed common cost of $79,000, you have figured the additional costs to manufacture each new recipe. For 50,000 tins of Extra Attack Brownies, additional variable costs would be $75,000. For 20,000 tins of Nutty Attack Brownies, additional variable costs would be $100,000. Remember that the contribution margin for Chocolate Attack Brownies per tin is $1.995. 1. What would be the incremental income/loss per tin for manufacturing Extra Attack Brownies? (If a net loss, use “( )” or “-“ in your answer.) 2. What would be the incremental income/loss per tin for manufacturing Nutty Attack Brownies? (If a net loss, use “( )” or “-“ in your answer.) 3. If Jordan and Taylor sold 100,000 tins of Chocolate Attach Brownies, 70,000 tines of Extra Attack Brownies, and 30,000 tins of Nutty Attack Brownies to Yumminess, what would be total sales in dollars? 4. If Jordan and Taylor sold 100,000 tins of Chocolate Attach Brownies, 70,000 tines of Extra Attack Brownies, and 30,000 tins of Nutty Attack Brownies to Yumminess, what would be the weighted-average contribution margin per tin. 5. If Jordan and Taylor sold 100,000 tins of Chocolate Attach Brownies, 70,000 tines of Extra Attack Brownies, and 30,000 tins of Nutty Attack Brownies to Yumminess, what would be the total net income/loss?
Explanation / Answer
Cost of Extra Attack Brownies for tin = 12
Cost of Nutty Attack Brownies for tin = 14.50
Cost of Chocolate Attack Brownies for tin = 10
Fixed commen cost = 79000
Extra Attack Brownies variable costs (50,000) = $75,000.
Variable cost of Extra Attack Brownies per tin = 75,000/50,000 = 1.5
Nutty Attack Brownies variable costs (20,000) = $100,000
Variable cost of Nutty Attack Brownies per tin = 100,000/20,000 = 5
contribution margin for Chocolate Attack Brownies per tin = $1.995
contribution = sales – variable cost
product
sales
variable cost
contribution
Extra Attack Brownies
12
1.5
10.5
Nutty Attack Brownies
14.5
5
9.5
From the give case :
product
sales
variable cost
contribution
Chocolate Attack Brownies
10
8.005
1.995
product
Quantity of products
Price per unit
Sales cost
Chocolate Attack Brownies
100000
10
1000000
Extra Attack Brownies
70000
12
840000
Nutty Attack Brownies
30000
14.5
435000
Total sales coat
2275000
product
Quantity of products
variable cost per unit
Total variable cost
Chocolate Attack Brownies
100000
8.005
800500
Extra Attack Brownies
70000
1.5
105000
Nutty Attack Brownies
30000
5
150000
Total variable cost
1055500
Total contribution =
Total contribution =
Total contribution = 1219500
Contribution cost per tin = Total contribution /Total no. of tins
= 1219500/200000
Contribution cost per tin = 6.0975
5)
product
Quantity of products
Total variable cost
Fixed cost
Sales
contribution
Income
Chocolate Attack Brownies
100000
800500
79000
1000000
199500
120500
Extra Attack Brownies
70000
105000
79000
840000
735000
656000
Nutty Attack Brownies
30000
150000
79000
435000
285000
206000
Net income = 982500
product
sales
variable cost
contribution
Extra Attack Brownies
12
1.5
10.5
Nutty Attack Brownies
14.5
5
9.5
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