Express Delivery s a rapidly groing delivery service. Last year, 80% of its reve

Question

Express Delivery s a rapidly groing delivery service. Last year, 80% of its revenue came fr the delivery of mail ng pouches and small standardized del ery boxes hich o desa 20% contribution margin The other 20% of its revenue came from delivering non-standardized boxes (which provides a 70% contribution margin), with the rapid growth of Internet retail sales, Express believes that there are great opportunities for growth in the delivery of non-standardized boxes. The company has fixed costs of $12,987,000 (a) What is the company's break-even point in total sales dollars? At the break-even point, how much of the company's sales are provided by each type of service? (Use Weighted-Average Contribution Margin Ratio rounded to 4 decimal places e.g. 0.2552 and round final answers to 0 decimal places, e.g. 2,510.) Total break-even sales Sale of mail pouches and small boxes Sale of non-standard boxes b) The company's management would like to hold its fixed costs constant but shift its sales m x so that 60% of its revenue comes from the delire o non andard e boxes and the remainder om pouch small boxes. If this were to occur, what would be the company's break-even sales, and what amount of sales would be provided by each service type? (Use Weighted-Average Contribution Margin Ratio rounded to 4 decimal places e.g. 0.2552 and round final answers to O decimal places, e.g. 2,510.) and Total break-even sales Sale of mail pouches and small boxes Sale of non-standardized boxes

Explanation / Answer

a Weighted average contribution margin ratio=(80%*20%)+(20%*70%)= 30% Total break even sales = 12987000/30%= $43290000 Sale of mail pouches and small boxes = 43290000*80%= $34632000 Sale of non standard boxes = 43290000*20%= $8658000 b Weighted average contribution margin ratio=(40%*20%)+(60%*70%)= 50% Total break even sales = 12987000/50%= $25974000 Sale of mail pouches and small boxes = 25974000*40%= $10389600 Sale of non standard boxes = 25974000*60%= $15584400

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