Popcorn Inc. currently sells plain popcorn at the ballpark. During a typical month the stand reports a profit of $18,000 with sales of $100,000 and fixed costs of $42,000 and variable costs of $0.64 per box.
Next year the company plans to start selling candy-coated popcorn for $3 a box. The candy-coated popcorn will have a variable cost of $0.72. The new equipment and personnel to handle the popcorn will increase monthly fixed costs by $17,616. Two boxes of candy-coated popcorn are expected to sell for every box of plain popcorn.
Required:
a. Determine the monthly break-even sales in units before adding the candy-coated popcorn product.
b. Determine the monthly break-even sales in units of each product during the first year of candy-coated popcorn sales assuming a constant sales mix.

Question

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The Answer of Popcorn Inc. currently sells plain popcorn at the ballpark. During a typical month the stand reports a profit of $18,000 with sales of $100,000 and fixed costs of $42,000 and variable costs of $0.64 per box.
Next year the company plans to start selling candy-coated popcorn for $3 a box. The candy-coated popcorn will have a variable cost of $0.72. The new equipment and personnel to handle the popcorn will increase monthly fixed costs by $17,616. Two boxes of candy-coated popcorn are expected to sell for every box of plain popcorn.
Required:
a. Determine the monthly break-even sales in units before adding the candy-coated popcorn product.
b. Determine the monthly break-even sales in units of each product during the first year of candy-coated popcorn sales assuming a constant sales mix.