I have no idea what to do. Exercise 20-5 E p s D ive is arapdly growng delvery s
ID: 2509040 • Letter: I
Question
I have no idea what to do.
Exercise 20-5 E p s D ive is arapdly growng delvery service uast year, a0% of ts r pouches-and s nal tandardized delr.ery boxes nd temet rets sales Express beieves that there which p s·20% contr buton venue came from the delivery of maling with the rapid growth of n. Thn thar 20% of ta et E me from deheng non standrázed b ees (whch provides a 70% contnb bon margn great apportunities for growth in the deivery of non-standardized bowes. The company has fised costs of $13,426,000 (a) what is the company's brek- even ooint in total sales delarn? Re the breok-even poim, how mach of the compary's sales are grovided by each type of service? (Use Welghted-Average Contribution Margin Ratio rounded to 4 decimal places e.g 0.2552 and rouonad final answers to 0 decimal place.3,10a.) Tatal break-aven sales Sale of mal pouchas and small boxes Sale of not-standard bences (b) The compen, 's management muld and smalil bones. If this were to occur, what would be the compsny's break-evan sales, and what smoust of sa les would be provided by each service type? (Use Weighted-A ike to hold Rs txed coses contare tur shift ts soes mx so that to% f its revenue comes from the delvery of non-standardized bases and the remainder from pouches verage Contributiont Margin Ratio f aeswers to o decimal places, e.g. 2.s1a) Totial break-ever salea Sale of mel pouches and amal boxes Bšle of non-stenderd zed boxesExplanation / Answer
1)weighted average contribution margin ratio :[Contribution % *weight ]mail pouches +[contribution % *weight ] non standarized boxes
weighted average contribution ratio : [20*.80]+[70*.20]
= 16+ 14
= 30%
BEP ($) fixed cost /Weighted average contribution ratio
= 13426000/.30
= $ 44,753,333.33 [rounded to 44,753,333]
mail pouches : 44,753,333 * .80= $ 35,802,666
non standardized : 44,753,333*.20 = $ 8,950,667
2)new weighted average contribution ratio : [20*.40]+[70*.60]
= 8+ 42
= 50 %
BEP($)= 13426000/.50 = $ 26,852,000
mail pouches : 26,852,000*.40 =$ 10,740,800
non standarized : 26,852,000*.60 = $ 6,111,200