Question

Anthony’s Donuts sells three types of donuts: sugar-glazed, cream-filled and giant-sized. The following table shows the sales price and variable cost for each type. Anthony’s incurs $259,200 a year in fixed costs. Assume that the store has a sales mix of three sugar-glazed, two cream-filled, and one giant-sized.

Type		Sales Price		Variable Cost		Contribution Margin
Sugar-glazed		$0.68		$0.52		$0.16
Cream-filled		0.84		0.56		0.28
Giant-sized		1.00		0.60		0.40

How many donuts of each type will be sold at the breakeven point? (Round answers to 0 decimal places, e.g. 25,000.)

Sugar-glazed
Cream-filled
Giant-sized

Answer 1

Answer:

For Sugar Glazed:

Break Even Point in Units = Fixed Cost / Contribution Margin per unit
Break Even Point in Units = $259,200 / $0.16
Break Even Point in Units = 1,620,000 units

For Cream-Filled:

Break Even Point in Units = Fixed Cost / Contribution Margin per unit
Break Even Point in Units = $259,200 / $0.28
Break Even Point in Units = 925,714 units

For Giant Sized:

Break Even Point in Units = Fixed Cost / Contribution Margin per unit
Break Even Point in Units = $259,200 / $0.40
Break Even Point in Units = 648,000 units