Homework Answers
Answer:
B) 6,00,000 units
Workings:
Calculation of break even sales:
| Particulars | Product 1 | Product 2 | Product 3 |
| Sales revenue: | |||
| Sale units (A) | 2000 units | 4000 units | 4000 units |
| Sale price (B) | 11$ | 15$ | 17$ |
| Revenue (A x B) | 22,000 $ | 60,000 $ | 68,000 $ |
| Less: variable cost : | |||
| Variable cost per unit (C) | 6$ | 12$ | 15$ |
| Variable cost (A x C) | 12,000 | 48,000 | 60,000 |
| Contribution ((AxB) - C) | 10,000 $ | 12,000 $ | 8,000 $ |
Now, Total contribution = 10,000 + 12,000 + 8000 = 30,000 $
Total sales = 22,000 + 60,000 + 68,000 = 1,50,000 $
Total variable cost = 12,000 + 48,000 +60,000 = 1,20,000 $
Fixed costs total = 1,20,000 $
Contribution margin = {sales - variable cost} / Sales
= ({1,50,000 - 1,20,000} / 1,50,000) x 100
= 20%
Break even sales = Fixed cost / contribution margin
= 1,20,000 $ / 20%
= 6,00,000 (Break even sales)
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