Exercise 19-8 Express Delivery s rapidly gro in delivery senice. Last year, 80%

Question

Exercise 19-8 Express Delivery s rapidly gro in delivery senice. Last year, 80% of its revenue came from the delivery of alling-po e s-and s (which provides a 20% contribution margin). The ther 20% of its revenue came from delivering non-standardized b es which pr i all s and zed delivery boxes sa 70% co tribut on margin with the rapid growth of Internet retail sales, Express believes that there are great opportunities for growth in the delivery of non-standardized baxes. The company has fixed costs of $13,423,000. weighted-Average Contribution Margin Ratio rounded to 4 decimal places e 0.2552 and round final answers to O decimal places, eg. 2,510.) Total break-even sales Sale of mail pouches and small boxes s Sale of non-standard boxes b The company's management would ike to hold its fixed costs constant but shift its sales mix so that 60% of ts revenue comes from the del ry of standard red 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 0.2552 and round final answers to O decimal by each service type? (Use Weighted-Average Contribution Margin Ratio rounded to 4 decimal places e.g. places, e.g. 2,510.) Total break-even sales Sale of mail pouches and small boxess Sale of non-standardized boxes

Explanation / Answer

Req a: Weighted Average Contribution margin ratio Sales CM ratio Wieghted Proportion Average CM ratio Standardized Pouches 80% 20% 16% Non Std boxes 20% 70% 14% Weighted CM ratio 30% Fixed cost: $ 13,423,000 Break even in $: fixed cost/ Weighted CM ratio = 13423,000 /30% = $ 44,743,333 Sale of mail pouches and sdt product (44743,333*80%): 35,794,666 Sale of non Std boxes (44743,333*20%): 8,948,667 Req b: Weighted Average Contribution margin ratio Sales CM ratio Wieghted Proportion Average CM ratio Standardized Pouches 40% 20% 8% Non Std boxes 60% 70% 42% Weighted CM ratio 50% Fixed cost: $ 13,423,000 Break even in $: fixed cost/ Weighted CM ratio = 13423,000 /50% = $ 26,846,000 Sale of mail pouches and sdt product (26846,000*40%) 10,738,400 Sale of non Std boxes (26,846,000*60%) 16,107,600

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