Question

Show All Your Works For Your Response: Fill Out 3 White Blanks Below Yummy! is a specialty popcorn store. It offers two varieties of popcorn: plain and flavored. The flavors range from Caramel Popcorn to Dark Chocolate Drizzled Popcorn to White Cheddar Popcorn. The plain popcorn sells for $3.10 per box and costs $0.40 per box to make. The flavored popcorn sells for $3.90 per box and costs $2.70 per box to make. Yummy! has fixed costs per month of $3,360. Yummy! sells 1 box of plain popcorn for every 4 boxes of flavored popcorn. How many boxes of plain popcorn and how many boxes of flavored popcorn must Yummy! sell each month to break even? First identify the formula to compute the sales in units at various levels of operating income using the contribution margin approach. (Abbreviations used: Avg. = average, and CM = contribution margin.) Fixed expenses + Operating income ) Weighed-avg. CM per unit - Breakeven sales in units Determine the weighted average contribution margin per unit by identifying the formula labels and then completing the calculations step by step. Plain $ 3.10 Sale price per unit Deduct Variable expense per unit Contribution margin per unit Sales mix in units Contribution margin Weighted average contribution margin per unit

Answer 1

Ans:

Calculation of weighted average contribution Margin per unit
	Plain	Flavored	Total
Selling price per box	$ 3.10	$ 3.90
Deduct : Variable cost per box	$ 0.40	$ 2.70
Contribution Margin per box	$ 2.70	$ 1.20
x Number of boxes sold	1	4	5
Total Contribution Margin	$ 2.70	$ 4.80	$ 7.50
Weighted Average contribution Margin per unit			$ 1.50
[Total Contribution Margin / Total Boxes sold]

Calculation of break even point in units
Break even point in boxes = Total Fixed cost / Weighted Average contribution Margin per unit
Break even point in boxes = $3360/ $1.50 = 2240 boxes
Number of boxes of Plain popcorn to be sold to break even = 2240 boxes x [1/5] = 448 boxes
Number of boxes of Flavored popcorn to be sold to break even = 2240 boxes x [4/5] = 1792 boxes
Popperl must sell 448 plain boxes and 1792 flavored boxes to break even.