Exercise 19-8 Express Delivery is a rapidly growing delivery service. Last year,
ID: 2525171 • Letter: E
Question
Exercise 19-8 Express Delivery is a rapidly growing delivery service. Last year, 80% of its evenue came om the delivery o mailing pouches" and s mal standardized delivery boxes which provides a 20% contribution margin). The other 20% of its revenue came from delivering non standardized boxes which provides a 70% contribution margin With the rapid growth of Internet retail sales, Express believes that there are great opportunities for gro hin the delivery of non-standardized boxes. The company has fixed costs of $13,825,000 (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 are provided by each type of service? (Use Weighted-Average Contribution Margin Ratio rounded to 4 decimal places e.g. 0.2552 and round final answers to 0 decimal places, e.g. 2,510.) Total break-even sales Sale of mail pouches and smiall boxes s Sale of non-standard boxes b The company's management would like o hold its ed costs constant but shift its sales mix so that 60% of its revenue comes om the deliver o nonstanda zed boxes and he mainder om pouches and s a boxes 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 4 decimal places e.g. 0.2552 and round final answers to 0 decimal places, e.g. 2,510.) Total break-even sales Sale of mail pouches and small boxes s Sale of non-standardized boxes Question Attempts: 0 of 15 used SAVE FOR LATER SUBMIT ANSWERExplanation / Answer
a. Computation of Company Breakeven Point Particular Amount Fixed Cost $13,825,000 Contribution Margin (W/Note-1) 30% Total Break Even Sales (13825000/30%) $46,083,333 Sale of Mail Pouches@80% $36,866,667 Sale of Non Standardized boxes @20% $9,216,667 W. Note-1 : Computation of Weighted Average Contribution Margin Revenue % Contribution margin % Weighted Average Standarized Boxes 80% 20% 16.0000% Non-Standardized Boxes 20% 70% 14.0000% Total 30.0000% b. Computation of Breakeven point with a Change in Revenue Mix Particular Amount Fixed Cost $13,825,000 Contribution Margin (W/Note-2) 50% Total Break Even Sales (13825000/50%) $27,650,000 Sale of Mail Pouches@40% $11,060,000 Sale of Non Standardized boxes @60% $16,590,000 W. Note-2 : Computation of Weighted Average Contribution Margin Revenue % Contribution margin % Weighted Average Standarized Boxes 40% 20% 8.00% Non-Standardized Boxes 60% 70% 42.00% Total 50.00%
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