The Snack Hut sells fudge,cashews,and caramel corn.They sold 10,000 units last year.Caramel corn outsold cashews by a margin of 2 to 1.Sales of fudge were the same as sales of cashews.Fixed costs for The Snack Hut are $19,500.Additional information follows: $$\begin{array} { | l | c | c | }
\hline { \text { Product } } & \text { Unit Sales Pricas } & \text { Unit Variable Cost } \
\hline \text { Fudge } & \$ 8.00 & \$ 4.00 \
\hline \text { Cashews } & \$ 10.00 & \$ 5.00 \
\hline \text { Carangl Corn } & \$ 6.00 & \$ 4.50 \
\hline
\end{array}$$
-Break-even sales in dollars for The Snack Hut is:

Question

The Snack Hut sells fudge,cashews,and caramel corn.They sold 10,000 units last year.Caramel corn outsold cashews by a margin of 2 to 1.Sales of fudge were the same as sales of cashews.Fixed costs for The Snack Hut are $19,500.Additional information follows: $$\begin{array} { | l | c | c | } 
\hline  { \text { Product } } & \text { Unit Sales Pricas } & \text { Unit Variable Cost } \
\hline \text { Fudge } & \$ 8.00 & \$ 4.00 \
\hline \text { Cashews } & \$ 10.00 & \$ 5.00 \
\hline \text { Carangl Corn } & \$ 6.00 & \$ 4.50 \
\hline
\end{array}$$ 
-Break-even sales in dollars for The Snack Hut is:

Quizplus · Accepted Answer

First, we need to calculate the total contribution margin. We know that fudge sales are the same as cashew sales, so we can combine their unit sales and calculate their total contribution margin by multiplying their unit contribution margin by their total unit sales:

(Total Unit Sales of Fudge and Cashews) x (Unit Contribution Margin of Fudge and Cashews) = (2,500 + 2,500) x ($2 + $3) = $25,000

Next, we need to calculate the unit contribution margin for caramel corn. Since we know that caramel corn outsold cashews by a margin of 2 to 1, we can calculate the unit sales of caramel corn as follows:

Unit Sales of Caramel Corn = 2 x (Unit Sales of Cashews) = 2 x 2,500 = 5,000

The unit contribution margin for caramel corn is $1, so we can calculate its total contribution margin as follows:

Total Contribution Margin for Caramel Corn = (Unit Sales of Caramel Corn) x (Unit Contribution Margin for Caramel Corn) = 5,000 x $1 = $5,000

Now, we can calculate the total contribution margin as follows:

Total Contribution Margin = Contribution Margin for Fudge and Cashews + Contribution Margin for Caramel Corn
Total Contribution Margin = $25,000 + $5,000 = $30,000

Finally, we can calculate the break-even point in dollars as follows:

Break-Even Sales = (Fixed Costs) / (Contribution Margin Ratio)
Contribution Margin Ratio = Total Contribution Margin / Total Sales = $30,000 / $10,000 = $3
Break-Even Sales = $19,500 / $3 = $6,500 x 3 = $19,500 x 2 = $39,000

Since the break-even sales are higher than the total sales from last year, option A and option D can be eliminated. Option B can also be eliminated since the break-even sales are not equal to the total sales. Therefore, the correct answer is C, $48,750.

The Snack Hut Sells Fudge,cashews,and Caramel Corn -Break-Even Sales in Dollars for the Snack Hut Is: A)$12,188

The Snack Hut Sells Fudge,cashews,and Caramel Corn -Break-Even Sales in Dollars for the Snack Hut Is:
A)$12,188