Popped! is a specialty popcorn store. It offers two varieties of popcorn:

plain and flavored. The flavors range from Caramel Popcorn to Dark Chocolate Drizzled Popcorn to White Cheddar Popcorn. The plain popcorn sells for $2 per box and costs $0.80 per box to make. The flavored popcorn sells for $4 per box and costs $2.50 per box to make. Popped! has fixed costs per month of $3,240. Popped! sells 1 box of plain popcorn for every 4 boxes of flavored popcorn.

How many boxes of plain popcorn and how many boxes of flavored popcorn must Popped! sell each month to break even?

Question

Business

Bryan Evans

17 February, 14:59

Popped! is a specialty popcorn store. It offers two varieties of popcorn:

plain and flavored. The flavors range from Caramel Popcorn to Dark Chocolate Drizzled Popcorn to White Cheddar Popcorn. The plain popcorn sells for $2 per box and costs $0.80 per box to make. The flavored popcorn sells for $4 per box and costs $2.50 per box to make. Popped! has fixed costs per month of $3,240. Popped! sells 1 box of plain popcorn for every 4 boxes of flavored popcorn.

How many boxes of plain popcorn and how many boxes of flavored popcorn must Popped! sell each month to break even?

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Answers (1)

Know the Answer?

Geovanni · Answer 1

Plain = 450 per month

Flavored = 1800 per month

Explanation:

We will calculate the breakeven in composite units first and then separate the into both products to find out individual number of both products that needs to be sold to break even.

The breakeven in units = Fixed cost / composite contribution margin

The composite contribution margin per unit = Contribution of Product 1 * weight of product 1 + Contribution of product 2 * weight of product 2

Thus, the composite contribution margin (CM) per unit for Popped is,

CM per unit-composite units = (2-0.8) * 1/5 + (4-2.5) * 4/5 = $1.44 per unit

The breakeven in units = 3240 / 1.44 = 2250 units per month

Out of this,

Plain = 2250 * 1/5 = 450 unts

Flavored = 2250 * 4/5 = 1800