Business, 01.09.2020 22:01 RKT28

The Mugger sells three types of mugs, flowers, dogs, and sports. The following information is available:. Total Sales Volume Selling Price Variable cost per unit Total fixed costs Flowers 25,000 $20 10 Dogs 100,000 $25 20 Sports 50,000 $10 6 $500,000
REQUIRED (show all supporting calculations):.
1. What is the breakeven point for The Mugger?
2. Would you recommend promoting the change in product mix to 4 to 2 to 1 of flower mugs, dog mugs, and sports mugs? Why?
3. An executive summary is required.

Answers: 2

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Answer from: breannaasmith1122

Flowers Dogs Sports Total

sales volume 25,000 100,000 50,000

selling price $20 $25 $10

variable cost $10 $20 $6

total fixed costs $500,000

contribution margin $10 $5 $4

weighted contribution margin = [(25,000 x $10) + (100,000 x $5) + (50,000 x $4)] / 175,000 = ($250,000 + $500,000 + $200,000) / 175,000 = $5.428571

break even point in units = $500,000 / $5.428571 = 92,105.26 ≈ 92,106 units

flowers: (25/175) x 92,106 = 13,158 units

dogs: (100/175) x 92,106 = 52,632 units

sports: (50/175) x 92,106 = 26,316 units

total = 92,106 units

break even point in $

flowers: 13,158 units x $20 = $263,160

dogs: 52,632 units x $25 = $1,315,800

sports: 26,316 units x $10 = $263,160

total = $1,842,120

currently total contribution margin is:

flowers: 25,000 units x $10 = $250,000

dogs: 100,000 units x $5 = $500,000

sports: 50,000 units x $4 = $200,000

total = $950,000

operating profit = $950,000 - $500,000 = $450,000

if the change is successful, then total contribution margin would be:

flowers: 100,000 units x $10 = $1,000,000

dogs: 50,000 units x $5 = $250,000

sports: 25,000 units x $4 = $100,000

total = $1,350,000

new operating profit = $1,350,000 - $500,000 = $850,000

So yes, I would recommend promoting the change in product mix to increase the sales of flower mugs in order to increase operating profit.

Answer from: Quest

They are enjoying the advantage of independence while running their own small business. they can go where they want when they want to, because they control the restaurant's hours. they can also make time for life emergencies, and set the hours to be when they do the best cooking.

Answer from: Quest

answer; situational irony;

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