Becky's Bakery sells three large muffins for every two small ones. A small muffin sells for $3, with a variable cost of $2.00. A large muffin sells for $5 with a variable cost of $2.50. Fixed costs are $3 000 per month. How much is the breakeven volume for each type of muffin?

Question

Quizplus · Accepted Answer

To find the breakeven volume, calculate the contribution margin for each muffin type and then determine the sales mix ratio. The contribution margin for a small muffin is $1 ($3 - $2), and for a large muffin is $2.50 ($5 - $2.50). The sales mix is 3 large muffins for every 2 small muffins. Using the weighted average contribution margin and fixed costs, the breakeven point is calculated to be 947 large muffins and 632 small muffins.

Becky's Bakery Sells Three Large Muffins for Every Two Small