Contribution margin ratio and sales mix and break-even point
Not what you're looking for?
Real-World Focus
In a recent report the Del Monte Foods Company reported three separate operating segments: consumer products (which includes a variety of canned foods including tuna, fruit, and vegetables); pet products (which includes pet food and snacks and vegetarian products); and soup and infant-feeding products (which includes soup, broth, and infant feeding and pureed products).
In its annual report Del Monte uses absorption costing. As a result, information regarding the relative composition of its fixed and variable costs is not available. We have assumed that $860.3 million if its total operating expenses of $1,920.3 million are fixed and have allocated the remaining variable costs across the three divisions. Sales data, along with assumed expense data, are provided on the next page.
(in millions)
Sales Variable costs
Consumer Products $1031.8 $610
Pet products 837.3 350
Soup and infant feeding products 302.0 100
$2,171.1 $1,060
Instructions
a) Compute each segment's contribution margin ratio and the sales mix.
b) Using the information computed in part (a), compute the company's break-even point in dollars, and then determine the amount of sales that would be generated by each division at the break-even point.
I really need the steps and formula used in solving this, as I must understand how this is done. Help!!! Thank you.
Purchase this Solution
Solution Summary
Contribution margin ratio, sales mix and break-even points are examined. Real-world focus events are examined.
Purchase this Solution
Free BrainMass Quizzes
Writing Business Plans
This quiz will test your understanding of how to write good business plans, the usual components of a good plan, purposes, terms, and writing style tips.
Business Processes
This quiz is intended to help business students better understand business processes, including those related to manufacturing and marketing. The questions focus on terms used to describe business processes and marketing activities.
Transformational Leadership
This quiz covers the topic of transformational leadership. Specifically, this quiz covers the theories proposed by James MacGregor Burns and Bernard Bass. Students familiar with transformational leadership should easily be able to answer the questions detailed below.
Understanding the Accounting Equation
These 10 questions help a new student of accounting to understand the basic premise of accounting and how it is applied to the business world.
Organizational Leadership Quiz
This quiz prepares a person to do well when it comes to studying organizational leadership in their studies.