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Compute the budgeted operating income

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Problem - Evita's Catering Company specializes in preparing Mexican dinners that it freezes and ships to restaurants in the Portland area. When a diner orders an item, the restaurant heats and serves it. The budget data for 2017 are:

Chicken Tacos Beef Enchiladas Selling price to restaurants $5 $7

Variable expenses 3 4

Contribution margin $2 $3

Number of units 250,000 125,000

The company prepares the items in the same kitchens, delivers them in the same trucks, and so forth. Therefore, decisions about individual products do not affect the fixed costs of $735,000.

REQUIRED:

a. Compute the budgeted operating income for 2017.

b. Compute the break-even in units, assuming that the company maintains its planned sales mix. Identify the number of units of each product.

Reference no: EM131560035

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