Question

To find the break-even point for a company that sells several products, the analyst must make an assumption about what the sales mix will be and calculate a weighted average contribution margin based on that sales mix.a. True or b. False

Answer 1

True because in the case if the the company is producing single product then the method is simple. If the company is making number of products we have to assume a sales mix to calculate breakeven point. Reaching breakeven point is not easy in multi products case. To calculate breakeven point we have to calculate weighted average contribution per unit to put the values in the following formula:

Breakeven point (units) = Fixed cost/ weighted average cost per unit