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(Solved) Express Delivery is a rapidly growing delivery service. Last year, 80% of its revenue came from the delivery of mailing "pouches" and...


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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.
(a) 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? (Use Weighted-Average Contribution
Margin Ratio rounded to 4 decimal places e.g. 0.2552 and round final answers to 0 decimal
places, e.g. 2,510.) $
Total break-even sales
$
Sale of mail pouches and small boxes
$
Sale of non-standard boxes (b) The company’s management would like to hold its fixed costs constant but shift its sales mix so
that 60% of its revenue comes from the delivery of non-standardized boxes and the remainder from
pouches and small boxes. If this were to occur, what would be the company’s break-even sales, and
what amount of sales would be provided by each service type? (Use Weighted-Average
Contribution Margin Ratio rounded to 4 decimal places e.g. 0.2552 and round final answers
to 0 decimal places, e.g. 2,510.) $
Total break-even sales
$
Sale of mail pouches and small boxes
$
Sale of non-standardized boxes

 


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