Candies Inc. manufactures and sells two products, marshmallow bunnies and jelly

Question

Candies Inc. manufactures and sells two products, marshmallow bunnies and jelly beans. The fixed costs are $350,000, and the sales mix is 70% marshmallow bunnies and 30% jelly beans. The unit selling price and the unit variable cost for each products are as follows:

Products Unit selling Price Unit Variable Cost
Marshmallow bunnies $2.40 $1.00
Jelly beans $1.80 $0.90

(a) Compute the break-even sales (units) for the overall product, E.

(b) How many units of each product, marshmallow bunnies and jelly beans, would be sold at the break-even point?

Explanation / Answer

units----X

Marshmallow bunnies $2.40

sales mix is 70% marshmallow bunnies

= $2.40 x 0.7 X

30% jelly beans

Jelly beans $1.80 $0.90

= $1.80 x 0.3X

= $2.40 x 0.7 X + $1.80 x 0.3X =$350,000 + $100 x 0.7X +$90 x    0.3X

X= 280,000

(a) Compute the break-even sales (units) for the overall product, E.

X= 280,000

(b) How many units of each product, marshmallow bunnies and jelly beans, would be sold at the break-even point?

Marshmallow bunnies =0.7 X 280,000 =196,000

JELLY BEANS =0.3 X 280,000 =84,000

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