Reference no: EM132977223
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 the most recent year) 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 most recent year were $75,000.
Problem 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?
Problem b: At the current product mix, how many Butterfly trees must Mountain Maples sell in a year to earn a profit of $50,000?
Problem c: Assume that Mountain Maples product mix changes to 50% Butterfly and 50% Moonfire. How does this information change your answer to part (a)?