Question

New attempt is in progress. Some of the new entries may impact the last attempt grading.Your answer is partially correct. 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 $13,112,000. (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 $enter a dollar amount rounded to 0 decimal places 43706667 Sale of mail pouches and small boxes $enter a dollar amount rounded to 0 decimal places Sale of non-standard boxes $enter a dollar amount rounded to 0 decimal places (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 $enter a dollar amount rounded to 0 decimal places Sale of mail pouches and small boxes $enter a dollar amount rounded to 0 decimal places Sale of non-standardized boxes $enter a

dollar amount rounded to 0 decimal places

Answer 1

Mail pouches Non- and small standardized boxes box Total 20% 70% 80% 20% 100% 16.0000% 14.0000% 30.0000% Contribution margin Sales mix ratio Weighted average contribution margin a) Break even sales Total Fixed cost Weighted average contribution margin $13,112,000 30.0000% $43,706,667 Mail pouches and small boxes $34,965,333 Non- standardized box $8,741,333 Break even sales value (Allocated in ratio of Sales mix 80:20) Mail pouches and small boxes 20% 40% 8.0000% Contribution margin Sales mix ratio Weighted average contribution margin Non- standardized box Total 70% 60% 100% 42.0000% 50.0000% b) Break even sales Total Fixed cost Weighted average contribution margin $13,112,000 50.0000% $26,224,000 Non- standardized Mail pouches and small boxes $10,489,600 box $15,734,400 Break even sales value (Allocated in ratio of Sales mix 40:60)