How many boxes must be sold to break even

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Problem - Candyland Inc. produces a particularly rich praline fudge. Each 10-ounce box sells for $5.60. Variable unit costs are as follows: Fixed overhead cost is $32,300 per year. Fixed selling and administrative costs are $12,500 per year. Candyland sold 35,000 boxes last year.

Required -

What is the contribution margin per unit for a box of praline fudge? What is the contribution margin ratio?

How many boxes must be sold to break even? What is the break-even sales revenue?

What was Candyland's operating income last year?

What was the margin of safety in sales dollars?

Suppose that Candyland Inc. raises the price to $6.20 per box but anticipates a sales drop to 31,500 boxes. What will be the new break-even point in units? Should Candyland raise the price? Explain.

Reference no: EM132700294

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