28.8k views
2 votes
Eastwick produces and sells three products. Last month's results are as follows: P1 P2 P3 Revenues $100,000 $200,000 $200,000 Variable costs 40,000 140,000 80,000 Product mix 1 2 2 Fixed costs total $200,000. What is Eastwick's break-even sales volume?

User Graeme G
by
8.4k points

1 Answer

4 votes

Answer:

BEP = 416,666.67

Step-by-step explanation:

First we add the sales, to get sales mix.

100,000 + 200,000 + 200,000 = 500,000

Then we addthe conrtibution fr CM mix

40,000 + 140,000 + 80,000 = 240,000

to get the CM ratio for the mix we do CM mix / SALES mix

240,000/500,000 = 0.48

We know move to the BEP formula:


(Fixed\:Cost)/(Contribution \:Margin \:Ratio) = Break\: Even\: Point_(dollars)


(200,000)/(0.48) = Break\: Even\: Point_(dollars)

BEP = 416,666.67

if we calculate we got:

P1 416,666.67 x 0.2 x .6 = 50,000

P2 416,666.67 x 0.4 x .3 = 50,000

P3 416,666.67 x 0.4 x .6 = 100,000

Total contribution 200,000

Which proved the answer

User Fredrikekre
by
7.2k points
Welcome to QAmmunity.org, where you can ask questions and receive answers from other members of our community.

9.4m questions

12.2m answers

Categories