Question

Sheridan, Inc., sells two types of water pitchers, plastic and glass. Plastic pitchers cost the company $34 and are sold for $49. Glass pitchers cost $43 and are sold for $64. All other costs are fixed at $1,090,908 per year. Current sales plans call for 15,540 plastic pitchers and 46,620 glass pitchers to be sold in the coming year. How many pitchers of each type must be sold to break even in the coming year? (Use contribution margin per unit to calculate breakeven units.) Plastic pitchers Glass pitchers eTextbook and Media Sheridan, Inc., has just received a sales catalog from a new supplier that is offering plastic pitchers for $32. What would be the new contribution margin per unit if managers switched to the new supplier? Plastic pitchers Glass pitchers Contribution margin per unit $

Answer 1

1) weighted average contribution margin per unit = (49-34)*25%+(64-43)*75% = 19.50

Overall break even = 1090908/19.50 = 55944

Plastic pitcher = 55944*25% = 13986

Glass pitcher = 55944*75% = 41958

2) Contribution margin per unit

	Plastic	Glass
Contribution margin per unit	49-32 = 17	64-43 = 21

Weighted average contribution margin per unit = 17*25%+21*75% = 20

Break even unit = 1090908/20 = 54545

	Plastic	Glass
Break even unit	54545*25% = 13636	40909