Question

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 $13,815,000. (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 A 46083333 Sale of mail pouches and small boxes A 36866667 Sale of non-standard boxes A 9216666 (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 27650000 " Sale of mail pouches and small boxes $ 11060000 Sale of non-standardized boxes 16590000 "

Answer 1

EXPTESS Delivey is a apidly go0wing (a) TO TOL breakKeven sales Saleof mail pouches and small box 46,050,000 36,840,000 sale of non standaad boxes 9210,000 Brrakeven sale Fixed cost contribution margin Ratio F 13 815 00O 807X201) + (20%x 301) 6 13,815000 13,81S000 O.16t 0.14 O 30 46,050,000 sale of mail pouche small 6ox F 36 840 000 46050,000Y 80% Sale of non stand ard boX a 46050000 x 20 $9.210000

ந் TO1GI breaKeven sale Sale of rmail Pouches and 23630,00O Smail 6oxe 11,052,000 (6,518,000 sale of non- standardize.a boxe EXPLanation 60% from Delivery of Non-ston box 407 Fa0m pouches amd small tox Revenue Romandes Rovenue S13 815O00 Breakeven sales: (60%-x 70) + C407x 207 E 13 815000 O.42 13 813 00O 21 630000 (Jsale of mail pouches E 2,630,000 X 407 tl,o52,000 9)sale of non sta b60x 6 23,6 30,000 16,518, 000