Problem A, B, and C "To be solved by DKhetan"

Problem A, B, and C

“To be solved by DKhetan”


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Problem A
Assume the Mountain Furniture Company sells two kinds of picnic tables, pine and redwood.
At a 2:1 unit
sales mix in which Mountain sells two pine tables for every redwood table, the following revenue and cost
information is available.
Redwood Table
Unit selling price
Unit variable costs
Unit contribution margin
Fixed costs per month:
Assuming a 2:1 sales mix, calculate Mountain Furniture’s current monthly average unit contribution margin,
break-even sales volume, and number of units of Pine and Redwood tables at break-even point.
Problem B
The Farm Fresh Food Market is a merchandiser of organic food items. The company is considering the
possibility of selling pomegranates that would sell for $0.59 each.
Pomegranates can be acquired in
unlimited quantities for $0.43 each.
There are no additional variable costs associated with acquiring and
selling pomegranates since labor is on a salaried basis.
However, in order to acquire pomegranates at this
price, Farm Fresh must pay $4,000 per year for membership in an International co-op.
a. How many pomegranates would Farm Fresh need to sell annually to justify joining the co-op (break-
What would be the total revenue at the breakeven point?
How many pomegranates would the company need to sell to earn a profit of $6,000?
If pomegranates cost were $0.51 instead of $0.43, how many pomegranates would need to be sold in
order to earn the same $6,000?
Problem C
During the most recent fiscal period, Karson Company had sales of $80,000.
Variable costs are 40% of
sales and fixed costs amounted to $16,000 for the year.
Calculate the following:
Contribution margin ratio
Operating leverage
Breakeven sales in dollars
Operating profit if sales increase by 15% next year

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