For the most recent month, Campus Bagels had revenues of $160,000 by selling 160,000 bagels. During...

 

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For the most recent month, Campus Bagels had revenues of $160,000 by selling 160,000 bagels. During this month, Campus Bagels incurred fixed costs of $75,000 and variable costs of $40,000. Management of Campus Bagels is considering extending their product line to include bagel sandwiches at a price of $4 per sandwich. They estimate selling FOUR bagels for EACH bagel sandwich. The variable cost per bagel sandwich would be $1.60 and Campus Bagels' total fixed costs will increase to $100,000 per month. a. Assume Campus Bagels decides to introduce bagel sandwiches. At the expected sales mix, how many bagels and bagel sandwiches does Campus Bagels need to sell at the breakeven point? b. Now, assume that Campus Bagels expects to sell a combined total volume of only 150,000 bagels and sandwiches at the same sales mix, but has yet to set a selling price for the sandwiches. What price would Campus Bagels need to charge for each bagel sandwich to make the breakeven? For the most recent month, Campus Bagels had revenues of $160,000 by selling 160,000 bagels. During this month, Campus Bagels incurred fixed costs of $75,000 and variable costs of $40,000. Management of Campus Bagels is considering extending their product line to include bagel sandwiches at a price of $4 per sandwich. They estimate selling FOUR bagels for EACH bagel sandwich. The variable cost per bagel sandwich would be $1.60 and Campus Bagels' total fixed costs will increase to $100,000 per month. a. Assume Campus Bagels decides to introduce bagel sandwiches. At the expected sales mix, how many bagels and bagel sandwiches does Campus Bagels need to sell at the breakeven point? b. Now, assume that Campus Bagels expects to sell a combined total volume of only 150,000 bagels and sandwiches at the same sales mix, but has yet to set a selling price for the sandwiches. What price would Campus Bagels need to charge for each bagel sandwich to make the breakeven?

Answer rating: 100% (QA)

a To find the breakeven point we need to determine the sales quantity of bagels and bagel sandwiches that will generate enough revenue to cover both f... View the full answer