Boston’s Dairy has just opened its main yogurt factory in upstate Massachusetts. This main factory can...

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Accounting

Boston’s Dairy has just opened its main yogurt factory inupstate Massachusetts. This main factory can produce 3,500 boxes ofyogurt monthly (each box contains twelve 6-oz cups). Due tooverwhelming demand for the company’s product, Boston’s Dairy hassigned a contract to rent a new factory, which can produce up to8,000 boxes per month. The monthly total fixed costs are $40,000 inthe main factory and $16,000 in the new factory. The variableproduction cost of yogurt is $4.50 per box in the main factory. Thevariable production cost in the new factory is $6.0 per box asmaterials have to be redistributed from the main factory. Theaverage selling price is $15, and the variable selling expense is$1 per box, which is the same for all factories. In addition,Boston’s Dairy plans to pay its sales force $0.80 per box as addedbonus for every box sold above the break-even point. How many boxesdoes the company have to produce and sell in order to earn a netoperating income of $10,000 per month (round all decimal up to onebox)

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4.3 Ratings (1083 Votes)

Desired level of 10000 we have to produce 8049 boxes At own factory New factory at BEP Value in 10000 desired profit Selling price 15 15 Variable costs 450 600 Variable selling expenses 100 100 Variable bonus 000 Total variable cost 550 700 Contribution 16 950 800 Contribution in value 33250 95 X 3500 boxe 227508 X 2844 See Answer

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