Use the information below to answer the following question(s).
The Snack Hut sells fudge, cashews, and caramel corn. They sold 10,000 units last year. Caramel corn outsold cashews by a ratio 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:

-The break-even sales volume in units for The Snack Hut is

Question

Use the information below to answer the following question(s).
The Snack Hut sells fudge, cashews, and caramel corn. They sold 10,000 units last year. Caramel corn outsold cashews by a ratio 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:
 
-The break-even sales volume in units for The Snack Hut is

Quizplus · Accepted Answer

Step 1: Calculate the percentage sold for each item by dividing the total units sold by the ratio:
- Caramel corn: 2 / (2+1) = 0.67 or 67%
- Cashew: 1 / (2+1) = 0.33 or 33%
- Fudge: 1 / (2+1) = 0.33 or 33%

Step 2: Calculate the sales volume for each item by multiplying the percentage sold by the total units sold:
- Caramel corn: 0.67 x 10,000 = 6,700
- Cashew: 0.33 x 10,000 = 3,300
- Fudge: 0.33 x 10,000 = 3,300

Step 3: Calculate the contribution margin for each item by subtracting the variable cost from the selling price:
- Caramel corn: $4 - $2 = $2
- Cashew: $5 - $3 = $2
- Fudge: $2 - $1 = $1

Step 4: Calculate the weighted average contribution margin for all items by multiplying the contribution margin for each item by the percentage sold and then summing the results:
- Weighted average contribution margin = (0.67 x $2) + (0.33 x $2) + (0.33 x $1) = $1.67

Step 5: Calculate the break-even sales volume by dividing the fixed costs by the weighted average contribution margin:
- Break-even sales volume = $19,500 / $1.67 = 11,677
- Round down to the nearest whole number = 6,500

Therefore, the answer is B) 6,500.

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