Your answer is incorrect. Try again. Express Delivery is a rapidly growing deliv

Question

Your answer is incorrect. Try again. Express Delivery is a rapidly growing delivery service. Last year, 80% of its revenue came from the delivery of mailing "pouches" and small, standardized delivery boxes which providesa 20% contribution margin). The other 20% of its revenue came from delivering non standardized boxes (whic opportunities for growth in the delivery of non-standardized boxes. The company has fixed costs of $13,112,000. h provides a 70% contribution margin with the rapid growth of Internet retail sales, Express believes that there are great (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 O decimal places, e.g. 2,510) Total break-even sales Sale of mail pouches and small boxes Sale of non-standard boxes (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 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 Sale of non-standardized boxes

Explanation / Answer

Answer

A.

The weighted average contribution margin =(80%*20%) + (20%*70%)

=30%

1. break-even sales = Fixed cost / weighted average contribution margin

=13,112,000 / 30%

=43,706,667

2.sale of “mail pouches and small boxes” =43706667*80%

=34,965,333

3.

Sale of “non-standard boxes” at break-even point. = 43706667*20%

=8,741,334

B.

The weighted average contribution margin =(40%*20%) + (60%*70%)

=50%

1. break-even sales = Fixed cost / weighted average contribution margin

=13,112,000 / 50%

=26,224,000

2.sale of “mail pouches and small boxes” =26224000*40%

=10,489,600

3.

Sale of “non-standard boxes” at break-even point. = 26224000*60%

=15,734,400

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