Question

24-3. Product mix ratio and break-even analysis. Break-even analysis has been useful in making product mix decisions. To illustrate, a cost analyst assumed the following situation for a com- pany's three major products: PROOUCT $10.00 $8.00 $11.00 $ 4.00 $3.00 $2.00 Sales price. Variable cost Contribution margi.rt Total fixed cost, $200,000. Required (1) The break-even point (in total and for each product) it the three products are sold in the ratio of 4:3:7 units. (Round the C/M ratio to 1100th of 1%) 2) The new break-even point (in total and for each product) it management decides to con- centrate its sales efforts on Product A with its higher contribution margin, resulting in a new sales ratio of 63.5 units. (Round the C/M ratio to 1/100th of 1%) в 24-а tiulo oteducts 2 Rauhles and Trinkets.

Answer 1

Part 1		Product
		A	B	C	Total
a	Sales Price	10.00	8.00	11.00	29.00
b	Variable cost	6.00	5.00	9.00	20.00
c	Contribution Margin	4.00	3.00	2.00	9.00
d	Contribution Margin Ratio	40%	38%	18%	31%
e	Product Mix	4	3	7	14
f	Fixed cost alotted as per Product Mix	57142.86	42857.14	100000.00	200000.00
g	Break even Point(in units)	14285.71	14285.71	50000.00	22222.22
h	Break even Point(in dollars)	142857.14	114285.71	550000.00	644444.44
Part 2
	Prduct Mix	6	3	5	14
	Fixed cost alotted as per Product Mix	85714.29	42857.14	71428.57	200000
	Break even Point(in units)	21428.57	14285.71	35714.29	22222.22
	Break even Point(in dollars)	214285.71	114285.71	392857.14	644444.44