I Scream For Ice Cream sells specialty ice cream in three? flavors: Rocky? Road,
ID: 2430244 • Letter: I
Question
I Scream For Ice Cream sells specialty ice cream in three? flavors: Rocky? Road, Peanut? Butter, and Fruity Tooty. It sold? 13,000 gallons last year. For every five gallons of ice cream? sold, one pound is Fruity Tooty and the remainder is split evenly between Peanut Butter and Rocky Road. Fixed costs for I Scream For Ice Cream are? $28,800 and additional information? follows:
Rocky Road
Peanut Butter
Fruity Tooty
Sales price per pound
?$6.75
?$7.00
?$3.25
Variable cost per pound
?$4.75
?$3.50
?$2.25
Breakeven sales in dollars for I Scream For Ice Cream is
Rocky Road
Peanut Butter
Fruity Tooty
Sales price per pound
?$6.75
?$7.00
?$3.25
Variable cost per pound
?$4.75
?$3.50
?$2.25
Explanation / Answer
For every 5 gallons, contribution margin = CM of Fruity tooty + (CM of Peanut butter)*2 + (CM of Rocky Road)*2
= (3.25-2.25) + (7-3.5)*2 + (6.75-4.75)*2
= 12 $
Breakeven = Fixed cost/Contribution margin = 28800/12 = 2400
As each contibution margin requires 5 gallons, hence total breakeven sales of Ice cream = 2400*5 = 12000 gallons
in dollars considering units required for each 5 gallons = 2400*2*6.75 + 2400*2*7 + 2400*3.25 = 73800 $
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