Problem
Mission Foods produces two flavors of tacos, chicken and fish, with the following characteristics:
|
Chicken
|
|
Fish
|
|
Selling price per taco
|
$
|
3.90
|
|
$
|
5.00
|
|
|
Variable cost per taco
|
|
1.95
|
|
|
2.50
|
|
|
Expected sales (tacos)
|
|
209,000
|
|
|
305,000
|
|
The total fixed costs for the company are $111,000.
Required:
a. What is the anticipated level of profits for the expected sales volumes?
b. Assuming that the product mix would be 41 percent chicken and 59 percent fish at the break-even point, compute the break-even volume.
c. If the product sales mix were to change to four chicken tacos for each fish taco, what would be the new break-even volume