Question

then #, and drag to the Favorites Bar folder. Or import from another browser. Import favorites Current Attempt in Progress 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 $13,152.000. (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 2 decimal places est. 0.22 ond round final answers to decimal places, es 2,510.) Total break-even sales $ Sale of mail pouches and small boxes $ Sale of non-standard boxes $ (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 2 decimal placeseg 022 and round final answers to decimal places, es 2,510.) Total break even sales $ Sale of mail pouches and small boxes $ Sale of non-standardized boxes $ Assistance Used e Textbook and Media

Answer 1

Breakeven sales = Fixed cost/ Contribution margin ratio

Average contribution margin

Mail pouches = 20*80% = 16%

Non standard = 70%*20% = 14%

Total contribution margin = 30%

Breakeven = 13,152,000/30%

= $43,840,000

Mail pouches = 43,840,000*80% = $35,072,000

Non standard = 43,840,000*20% = $8,768,000

2)

Average contribution

Mail pouches = 20*40% = 8%

Non standard = 70*60% = 42%

Total = 50%

Breakeven = 13,152,000/50%

= $26,304,000

Mail pouches = 26,304,000*40% = $10,521,600

Non standard = 26,304,000*60% = $15,782,400