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How soon can campbell soups break-even

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Breakeven Analysis

Campbell Soups has set up a factory in Hong Kong at an estimated cost of $3.1 Million. In the first few years of operation, its product line will consist of duck soup and egg noodle soup to be sold in 16 oz. cans. The factory can make 900,000 cans of soup a month (any combination of the two varieties).

Cost estimates for the product line is as follows:

 Material cost/can: 5 cents (egg noodle), 20 cents (duck)

 Labor cost per can: 18 cents (both types of soup)

 Promotional costs: 10% of sales

 Product line launch: $720,000 (covers both soups)

 Administrative costs:  $230,000 per year

Campbells will price the duck soup at $1.20 per can, and the egg noodle soup at $0.70 per can.

It expects to sell twice as many cans of duck soup as egg noodle soup.

(a) At break-even, how many cans of each type of soup would Campbell soups have sold?

(b) How soon can Campbell Soups break-even, assuming it can operate at full factory capacity?

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This assignment is based on the calculation of break even analysis of Campbell Soups who has set up a factory in Hong Kong. The cost estimates of the factory are provided. It includes the calculation of number of cans which include the total number of Campbell soups sold. Calculation of the break even point at full factory capacity.

Reference no: EM131181561

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Reviews

inf1181561

8/27/2016 5:00:59 AM

Thank you for the work guys, it sounds entirely great to me... Think it would have taken me 1 day to complete that. I sincerely had no clue where to begin. I will have another task for that subject in the near future, so no doubt I will seek the services of 'custom papers' for that one also. Much thanks to you such a great amount for your time and exertion, it is GREATLY appreciated!

inf1181561

8/27/2016 4:55:11 AM

Is there anyway we can have this done soon? I see proposed due date but is there any way to get it done quicker.

len1181561

8/25/2016 2:58:24 AM

First evaluate the unit contribution margin for each soup; then use the sales ratio to figure out how many units of each soup Campbell's would sell - this will allow you to evaluate TOTAL contribution from both soups. Subtract any recurring fixed costs from this number, and then find out time to BE on the one-time fixed costs) - Minimum 100 words accepted Breakeven Analysis

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