Break-Even with Multiple Products Wylie’s Watering Hole sells fruit smoothies. Last year, Wylie sold a total...
Break-Even with Multiple Products
Wylie’s Watering Hole sells fruit smoothies. Last year, Wylie sold a total of 24,000 fruit smoothies. Pineapple smoothies outsold Coconut smoothies 2 to 1. Sales of Mango smoothies were the same as sales of pineapple. Fixed costs for the company are $18,189 and additional information follows:
| Product | Unit Sales Prices |
Unit Variable Cost |
|---|---|---|
| Pineapple | $2.50 | $0.80 |
| Coconut | $3.75 | $1.35 |
| Mango | $3.20 | $1.40 |
a. Calculate the sales mix percentage of all three products (based upon the number of smoothies).
| Pineapple | Coconut | Mango | |
|---|---|---|---|
| Sales mix (%) | Answer | Answer | Answer |
b. Calculate the weighted average contribution margin for all three types of drinks.
| Pineapple | Coconut | Mango | Total | |
|---|---|---|---|---|
| Wtd. avg. CM | Answer | Answer | Answer | Answer |
c. Calculate the break-even volume in number of total smoothies.
Answer
d. Calculate the break-even point in revenue.
Round answer to the nearest dollar.
$Answer
Homework Answers
Sales Mix is 2:1:2
a.
Sales mix %
Pineapple = 2/5 = 40%
Coconut = 1/5 = 20%
Mango = 2/5 = 40%
b.
Weighted average contribution margin:
Pineapple = ($2.50 - $0.80) X 40% = $0.68
Coconut = ($3.75 - $1.35) X 20% = $0.48
Mango = ($3.20 - $1.40) X 40% = $0.72
Total = $1.88
c.
Break-even volume in number of total smoothies:
= $18,189 / $1.88
= 9,675
d.
Average selling price = [(2 X $2.50) + $3.75 + (2 X $3.20)] / 5 = $3.03
= $3.03 X 9,675
= $29,315
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Break-Even with Multiple Products
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