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Question 31 Presto Candle Supply makes candles. The sales mix (as a percentage of total dollar sales) of its three product li

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Answer #1

Break even point = Total fixed expense / (weighted average contribution margin ratio)

Total fixed expenses = 488400

weighted average contribution margin ratio -

a b a*b
Sales Mix Contrbution margin ratio Weighted avg. ratio
Birthday 35% 10% 3.50%
standard tapered 45% 30% 13.50%
Large Scented 20% 40% 8.00%
Weighted avg. contribution Ratio (Total) 25.00 %

Weighted average BEP = 485595/25.00%

= 1942380

BEP (Birthday) = Weighted average BEP * sales mix of birthday

= 1942380*35%

= 679833

BEP (standard tapered) = 1942380*45%

= 874071

BEP (Large scented) = 1942380*20 %

= 388476

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