Page 68 - P1 Integrated Workbook STUDENT 2018
P. 68
Chapter 4
Solution
Break-even point (BEP) in units
Weighted average contribution:
Total contribution/total units
= ($20 × 20,000 + $15 × 10,000)/(20,000 + 10,000)
= $18.33 per unit
Alternatively:
(contribution X × X sales mix proportion) + (contribution Y × Y sales mix
proportion)
= $20 × 2/3 + $15 × 1/3
= $18.33 per unit
BEP in units = fixed costs/WA contribution per unit
= $200,000/$18.33 = 10,911 units
Break-even point (BEP) in revenue
Weighted average C/s ratio:
Total contribution/total sales revenue
= ($20 × 20,000 + $15 × 10,000)/($50 × 20,000 + $60 × 10,000)
= $550,000/$1,600,000 = 0.34375
Alternatively:
(C/s ratio X × X sales mix proportion) + (C/s ratio Y × Y sales mix proportion)
= 0.4 × 2/3 + 0.25 × 1/3
= 0.35
BEP in revenue = fixed costs/WA C/s ratio
= $200,000/0.34375 = $581,818
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