Question

Multiple Choice Question 133 Sandhill's sells two products, a pepper relish with a selling price of $5.95 and a variable cost per jar of $2.60 and a blackberry marmalade with a selling price of $5.95 and a variable cost per jar of $2.50. Sandhill's expected sales are 1200 jars of pepper relish and 1800 jars of blackberry marmalade. Fixed expenses are $10216. At what volume of sales dollars will Sandhill's break even? $10216 $17850 $17826 cannot be determined from the information provided Click If you would like to show Work for this question: Open Show Work

Answer 1

Selling price per unit of pepper relish = $5.95

Variable cost per unit of pepper relish = $2.60

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

= 5.95-2.60

= $3.35

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

= 3.35/5.95

= 56.30%

Selling price per unit of blackberry marmalade = $5.95

Variable cost per unit of blackberry marmalade = $2.50

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

= 5.95-2.50

= $3.45

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

= 3.45/5.95

= 57.98%

sales mix = 1,200 jars of pepper relish : 1,800 jars of blackberry marmalade

= 2:3

Weighted contribution margin ratio = 56.30 x 2/5 + 57.98 x 3/5

= 22.52%+34.79%

= 57.31%

Fixed expenses = $10,216

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

= 10,216/57.31%

= $17,826

Third option is correct option.

Kindly comment if you need further assistance.

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