Jackie's Snacks sells fudge, caramels, and popcorn. It sold 11,000 units last year. Popcorn outsold fudge by a margin of 2 to 1. Sales of caramels were the same as sales of popcorn. Fixed costs for Jackie's Snacks are $15,000. Additional information follows: The breakeven sales volume in units for Jackie's Snacks is (Round the final answer up to the nearest unit.)

Question

Jackie's Snacks sells fudge, caramels, and popcorn. It sold 11,000 units last year. Popcorn outsold fudge by a margin of 2 to 1. Sales of caramels were the same as sales of popcorn. Fixed costs for Jackie's Snacks are $15,000. Additional information follows:  The breakeven sales volume in units for Jackie's Snacks is (Round the final answer up to the nearest unit.)

Quizplus · Accepted Answer

To find the breakeven sales volume in units, we need to calculate the contribution margin per unit.

First, let's find the sales mix for each product:

- Fudge: x
- Popcorn: 2x
- Caramels: 2x (since sales of caramels are the same as sales of popcorn)

The total sales mix is:

x + 2x + 2x = 5x

So the percentage of sales for each product is:

- Fudge: x/5x = 1/5 = 0.2 = 20%
- Popcorn: 2x/5x = 2/5 = 0.4 = 40%
- Caramels: 2x/5x = 2/5 = 0.4 = 40%

Next, let's find the contribution margin per unit for each product:

- Fudge: $3/unit
- Popcorn: $2/unit
- Caramels: $2/unit

The weighted average contribution margin per unit is:

0.2 x $3 + 0.4 x $2 + 0.4 x $2 = $2.2

Now we can use the breakeven formula:

Breakeven sales volume = Fixed costs / Contribution margin per unit

Breakeven sales volume = $15,000 / $2.2 = 6,818.18

Round up to the nearest unit:

Breakeven sales volume = 6,819

Therefore, the best answer is C) 4,167.

Jackie's Snacks Sells Fudge, Caramels, and Popcorn