Mountain Maples is a mail-order nursery dedicated to growing, selling, and shipping beautiful Japanese Maple trees. Located on a ridge-top in Mendocino County, northern California, Mountain Maples offers two distinctive types of Japanese Maples: Butterfly and Moonfire. The trees are sold after five growing seasons, and revenue and cost data for each tree type (for most recent years) are as follows:
Butterfly Moonfire
Quantity Sold 800 1,600
Selling Price Per Tree $200 $100
Variable Cost Per Tree $100 $50
Mountain Maples' fixed costs for the more recent years were $75,000.
a. how many Japanese Maples must Mountain Maples sell in a year to break even? At this sales volume, how many Butterfly and Moonfire trees are sold?
b. At the current product mix, how many Butterfly trees must Mountain Maples sell in a year to earn a profit of $50,000?
c. Assume that Mountain Maples product mix changes to 50% Butterfly and 50% Moonfire. How does this information change your answer t part (a)?