1.
| Details
(A) |
Sales Mix
(B) |
Sale price($)
(C) |
Total Sales($)
( B x C) |
| Regular cupcakes |
80% |
3 |
2.4 |
| Deluxe cupcakes |
20% |
5 |
1.0 |
| Total |
|
|
3.4 |
| Revenue (given) |
|
|
34,000 |
| Total No. of cupcakes sold(34,000/3.4) |
|
|
10,000 |
| No.of regular cupcakes sold |
80% of 10,000 = 8,000 |
|
| No.of deluxe cupcakes sold |
20% of 10,000 = 2,000 |
2.
| Details |
No. of units |
Contribution margin
per unit ($) |
Total contribution
Margin ($) |
| Regular cupcakes |
8,000 |
0.95 |
7,600 |
| Deluxe cupcakes |
2,000 |
2.15 |
4,300 |
| Total |
10,000 |
|
11,900 |
| Weighted average |
|
$1.19 ($11,900/10,000) |
|
3.
The new sales mix will be
Deluxe 48% = 48% of 10,000 = 4,800
Balance will be regular . i.e., Regular = 10,000 – 4,800 = 5,200
| Details |
No. of units |
Contribution margin
per unit ($) |
Total contribution
Margin ($) |
| Regular cupcakes |
5,200 |
0.95 |
4,940 |
| Deluxe cupcakes |
4,800 |
2.15 |
10,320 |
| Total |
10,000 |
|
15,260 |
| Weighted average |
|
$1.53 ($15,260/10,000) |
4.
Total revenue will be as follws:
| Details |
No. of units |
Per unit |
Total |
| Regular |
5,200 |
$3.00 |
$15,600 |
| Deluxe |
4,800 |
$5.00 |
$24,000 |
| Total Revenue |
|
|
$39,600 |
| Details |
percentage of sales |
Value ($) |
| Revenue |
|
39,600 |
| Variable COGS |
40% |
15,840 |
| Variable S&A |
25% |
9,900 |
| Total Variable cost |
|
25,740 |
| Contribution Margin |
|
13,860 |
| Fixed Cost |
|
15,000 |
| Profit |
|
-1,140 |
5. As Molly’s sales commission does not differentiate between regular and deluxe cupcakes , the sales staff will not be encouraged to make effort to sell high margin cupcakes.
6.
| Details |
Value |
| Fixed cost (A) |
$15,000 |
| After tax profit Profit (B) |
$3,000 |
| Tax rate (C) |
30% |
| Profit before tax (D) (B/1-C) |
$4,286 |
| Total contribution to be generated (E) (A+D) |
19,286 |
| Weighted average contrubiton per unit (F) |
$1.53 |
| No. of units to be sold (E / F) |
12,605 |
| Deluxe cupcakes (48%) |
6,050 |
