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 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
growth in the delivery of non-standardized boxes. The company has
fixed costs of $12,252,000.
(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 2 decimal places e.g. 0.22 and round final answers to 0 decimal
places, e.g. 2,510.)
Total break-even sales |
$Enter a dollar amount |
|
---|---|---|
Sale of mail pouches and small boxes |
$Enter a dollar amount |
|
Sale of non-standard boxes |
$Enter a dollar amount |
(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 2 decimal
places e.g. 0.22 and round final answers to 0 decimal places, e.g.
2,510.)
Total break-even sales |
$Enter a dollar amount |
|
---|---|---|
Sale of mail pouches and small boxes |
$Enter a dollar amount |
|
Sale of non-standardized boxes |
$Enter a dollar amount |
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