# Boswell's Beanery is a locally owned specialty food product company in Northeast Ohio that has been in existence for over 30 years. Its products include flavored coffees and teas, dips, dressings, sauces, and seasonings. The company attends a variety of craft and other shows throughout the year and sets up a booth at each show to sell its products. Free

Chapter 7, Exercises #11

Boswell's Beanery is a locally owned specialty food product company in Northeast Ohio that has been in existence for over 30 years. Its products include flavored coffees and teas, dips, dressings, sauces, and seasonings. The company attends a variety of craft and other shows throughout the year and sets up a booth at each show to sell its products. Free samples are offered to show attendees, and the Boswell's booth is always packed. Shows that Boswell's attends include the Yankee Peddler Festival in Canal Fulton, Ohio, the Great Big Home Garden Show at the Cleveland I-X Center, and the Ohio Mart at Stan Hywet in Akron, Ohio. Boswell's also sells its products online via its website.

Each of the shows that Boswell's attends has a different booth rental fee. Booth rental fees can range from $350 to $5,000 for each show.

Assume that the booth rental fee at the Great Big Home Garden Show is $4,200 for the ten-day show and that Boswell's has an average contribution margin ratio of 40% on its products.

Questions

1. How much in sales does Boswell's need to break even on the Great Big Home Garden Show, assuming that the booth rental fee is the only fixed cost of the show?

2. The Great Big Home Garden Show runs for ten days. How much, on average, must Boswell's sell each day of the show to break even?

3. Assume that 100,000 people visit the home and garden show each year spread evenly throughout the ten-day period. If 5% of the attendees purchase from Boswell's at the show, how much must each customer purchase from Boswell's for the company to break even on the booth rental fee?

4. Assume now that Boswell's wants to make a target profit of $4,000 for the Great Big Home Garden Show. What sales volume will allow Boswell's to achieve this target profit?

Contribution Margin

Contribution margin is an important element of cost volume profit analysis that managers carry out to assess the maximum number of units that are required to be at the breakeven point. Contribution margin is the profit before fixed cost and taxes...

Each of the shows that Boswell's attends has a different booth rental fee. Booth rental fees can range from $350 to $5,000 for each show.

Assume that the booth rental fee at the Great Big Home Garden Show is $4,200 for the ten-day show and that Boswell's has an average contribution margin ratio of 40% on its products.

Questions

1. How much in sales does Boswell's need to break even on the Great Big Home Garden Show, assuming that the booth rental fee is the only fixed cost of the show?

2. The Great Big Home Garden Show runs for ten days. How much, on average, must Boswell's sell each day of the show to break even?

3. Assume that 100,000 people visit the home and garden show each year spread evenly throughout the ten-day period. If 5% of the attendees purchase from Boswell's at the show, how much must each customer purchase from Boswell's for the company to break even on the booth rental fee?

4. Assume now that Boswell's wants to make a target profit of $4,000 for the Great Big Home Garden Show. What sales volume will allow Boswell's to achieve this target profit?

Contribution Margin

Contribution margin is an important element of cost volume profit analysis that managers carry out to assess the maximum number of units that are required to be at the breakeven point. Contribution margin is the profit before fixed cost and taxes...

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