Question

Multiple Choice Question 132 Sunland's sells two products, a pepper relish with a selling price of $5.76 and a variable cost per jar of $2.44 and a blackberry marmalade with a selling price of $5.76 and a variable cost per lar of $2.34. Sunland's expected sales are 1160 jars of pepper relish and 1740 jars of blackberry marmalade. Fixed expenses are $9876. How much revenue will Sunland's need to generate from the sale of blackberry marmalade in order to break even? $10098 $8721 $5821 $10022 Click if you would like to Show Work for this question: Open Show Work

Answer 1

Selling price per unit of pepper relish = $5.76

Variable cost per unit of pepper relish = $2.44

Contribution margin per unit of pepper relish = Selling price per unit of pepper relish - Variable cost per unit of pepper relish

= 5.76-2.44

= $3.32

Contribution margin of pepper relish = Contribution margin per unit of pepper relish /Selling price per unit of pepper relish

= 3.32/5.76

= 57.64%

Selling price per unit of blackberry marmalade = $5.76

Variable cost per unit of blackberry marmalade = $2.34

Contribution margin per unit of blackberry marmalade = Selling price per unit of blackberry marmalade - Variable cost per unit of blackberry marmalade

= 5.76-2.34

= $3.42

Contribution margin ratio of blackberry marmalade = Contribution margin per unit of blackberry marmalade/Selling price per unit of blackberry marmalade

= 3.42/5.76

= 59.38%

sales mix = 1,160 jars of pepper relish : 1,740 jars of blackberry marmalade

= 2:3

Weighted contribution margin ratio = 57.64 x 2/5 + 59.38 x 3/5

= 23.05%+35.63%

= 58.68%

Fixed expenses = $9,876

Break even sales dollars = Fixed expenses / Weighted contribution margin ratio

= 9,876/58.68%

= $16,830

Break even sales dollars of Blackberry marmalade = Break even sales dollars x 3/5

= 16,830 x 3/5

= $10,098

First option is correct option.

Kindly comment if you need further assistance. Thanks‼!

Kindly comment if you need further assistance. Thanks‼!