Question

Express Delivery is a rapidly growing delivery service. Last year, 80% of its revenue came from the delivery of mailing "pouches" and small, standardized delivery boxes (which provides a 20% contribution margin). The other 20% of its revenue came from delivering non-standardized boxes (which provides a 70% contribution margin). With the rapid growth of Internet retail sales, Express believes that there are great opportunities for growth in the delivery of non-standardized boxes. The company has fixed costs of $13,112,000.

What is the company’s break-even point in total sales dollars? At the break-even point, how much of the company’s sales are provided by each type of service?

Answer 1

Break even sales = $43,706,666.7

Sale of small boxes and mail pouches = $34,965,333.4

Sales from non standardized boxes = $6,993,066.68

Step-by-step explanation:

The computation of given question is below:-

Sales

= (0.8 × 0.20)Sales + (0.20 × 0.70)Sales = $13,112,000

0 .16 × sales + 0.14 × sales = $13,112,000

0.30 × Sales = $13,112,000

Break even sales = $43,706,666.7

Sale of small boxes and mail pouches

= $43,706,666.7 × 0.80

= $34,965,333.4

Sales from non standardized boxes

= $34,965,333.4 × 0.20

= $6,993,066.68