Question

Edible exclamation mark is a specialty popcorn store. It offers two varieties of​ popcorn: plain and flavored. The flavors range from Caramel Popcorn to Dark Chocolate Drizzled Popcorn to White Cheddar Popcorn. The plain popcorn sells for $ 1.80 per box and costs $ 0.20 per box to make. The flavored popcorn sells for $ 3.95 per box and costs $ 2.60 per box to make. Edible exclamation mark has fixed costs per month of $ 3 comma 374. Edible exclamation mark sells 1 box of plain popcorn for every 4 boxes of flavored popcorn. How many boxes of plain popcorn and how many boxes of flavored popcorn must Edible exclamation mark sell each month to break​ even?

Answer 1

plain popcorn = 482 boxes

flavored popcorn= 1,928 boxes

Step-by-step explanation:

Break-Even Point is the Level of Activity or Sale where a firm makes neither a Profit nor a Loss.

Break - Even Point in Quantities = Fixed Cost / Contribution per unit

For our Scenario we use the following :

Total Fixed Cost = $3,374

Contribution per Unit

There is a product mix of 1:4

Contribution plain popcorn = ($ 1.80-$ 0.20)× 1 = $1.60

Contribution flavored popcorn = ($ 3.95-$ 2.60)× 4 = $5.40

Total Contribution per Unit = $7.00

Break - Even Point in Quantities = Fixed Cost / Contribution per unit

= $3,374/ $7.00

= 482 boxes

Break-even

plain popcorn = 482 boxes × 1

= 482 boxes

flavored popcorn= 482 boxes × 4

= 1,928 boxes