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 $13,040,000.
(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 |
|
---|---|---|
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 |
(a) | |||
Details provided in the question | |||
Proportion of Mail pouches & small boxes = 80% | |||
Proportion of Non standardized boxes = 20% | |||
Contribution Margin of Mail pouches & small boxes = 20% | |||
Contribution Margin of Non standardized boxes = 70% | |||
Weightage | Contribution | Weighted Average Contribution | |
Mail pouches & small boxes | 0.8000 | 20% | 0.16000 |
Non standardized boxes | 0.2000 | 70% | 0.14000 |
1.0000 | 0.30000 | ||
Weighted average Contribution = 30% | |||
Break-even Sales = Fixed Costs/Contribution Margin | |||
= $ 13,040,000/0.30 | |||
= $43,466,667 | |||
Proportion of Mail pouches & small boxes = 80% | |||
Sale of Mail pouches & small boxes = 80%* $ 43,466,667 | |||
= $ 34,773,333 | |||
Proportion of Non standardized boxes = 20% | |||
Sale of Non standardized boxes = 20%* $ 43,466,667 | |||
= $ 8,693,334 | |||
Answer | |||
Total break-even sales | $43,466,667 | ||
Sale of mail pouches and small boxes | $34,773,333 | ||
Sale of non-standard boxed | $8,693,334 | ||
(b) | |||
Details provided in the question | |||
Proportion of Mail pouches & small boxes = 40% | |||
Proportion of Non standardized boxes = 60% | |||
Contribution Margin of Mail pouches & small boxes = 20% | |||
Contribution Margin of Non standardized boxes = 70% | |||
Weightage | Contribution | Weighted Average Contribution | |
Mail pouches & small boxes | 0.4000 | 20% | 0.08000 |
Non standardized boxes | 0.6000 | 70% | 0.42000 |
1.0000 | 0.50000 | ||
Weighted average Contribution = 50% | |||
Break-even Sales = Fixed Costs/Contribution Margin | |||
= $ 13,040,000/0.50 | |||
= $26,080,000 | |||
Proportion of Mail pouches & small boxes = 40% | |||
Sale of Mail pouches & small boxes = 40%* $ $26,080,000 | |||
= $ 10,432,000 | |||
Proportion of Non standardized boxes = 60% | |||
Sale of Non standardized boxes = 60%* $ $26,080,000 | |||
= $ 15,648,000 | |||
Answer | |||
Total break-even sales | $26,080,000 | ||
Sale of mail pouches and small boxes | $10,432,000 | ||
Sale of non-standard boxed | $15,648,000 |
Express Delivery is a rapidly growing delivery service. Last year, 80% of its revenue came from...
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 $13,368,000. (a)...
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 $13,454,000. (a)...
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 $13,815,000. (a)...
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 $13,423,000.
Exercise...
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 $13,112,100. (a)...
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 $13,868,100. (a)...
Exercise 19-8 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...
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...
Johnson Delivery is a rapidly growing delivery service. Last year, 80% of its revenue came from the delivery of mailing "pouches" and small, standarized 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 sales, Express believes that there are great opportunities for growth in the delivery of non-standarized boxes. The company has fixed costs of $12,120,000 (a) What...
E19-8 Express Delivery is a rapidly growing delivery service. Last year, 80% of its rev- enue 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...