What price would campus bagels need to charge

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Reference no: EM133662545

Question: For the most recent month, Campus Bagels had revenues of $120,000 by selling 120,000 bagels. During this month, Campus Bagels incurred fixed costs of $75,000 and variable costs of $30,000.

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 year.

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? 27,850 bagel sandwiches, 111,500 bagels

Now, assume that Campus Bagels expects to sell a combined total volume of only 120,000 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? $4.43/bagel sandwich to break even

Reference no: EM133662545

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