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Question - Chipper sells potato crisps (packets) and chocolate bars from a food stall at local markets. The variable cost of the potato crisps is $0.80 per packet. The contribution margin for the chocolate bars are $0.50 per bar. Selling price of the two products are $2.50 for the potato crisps and $2.00 for the chocolate bars. Fixed costs of running the stall is $50 000 per annum. Chipper sells 5 packets of potato crisps for every 2 chocolate bars sold.
Required -
a. Calculate the number of potato crisps packets and chocolate bars that Chipper needs to sell in order to break even.
b. If Chipper would like to make a profit of $12 000 (after tax) for the year, calculate total sales (in dollar terms) that he needs to generate (assume a tax rate of 30% per annum)
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