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Debbie's Kitchen sells three types of soups: tomato basil, cheddar dill, and loaded potato. The ...

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Debbie's Kitchen sells three types of soups: tomato basil, cheddar dill, and loaded potato. The ...

Debbie's Kitchen sells three types of soups: tomato basil, cheddar dill, and loaded potato. The following table shows the sales price and variable cost for each type. Debbie incurs $200,000 a year in fixed costs. Assume that the restaurant has a sales mix of two tomato basil servings, two cheddar dill servings and one loaded potato serving.

Type

Sales Price

Variable Cost

Contribution Margin

Tomato basil	$3.00	$1.50	$1.50
Cheddar dill	4.50	2.00	2.50
Loaded potato	4.50	2.50	2.00

Required:

a.	How many servings of each type will be sold at the break-even point?

b.	What amount of revenue would need to be generated by each type of soup for

the company to earn $25,000 in operating income?

Textbook

Managerial Accounting

Edition: 4^th

Author: Davis

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