So Breakeven number of units using the above formula is,Īccordingly, the breakeven numbers for Product A are 50% of 200 that is 100 and similarly for Product B, and Product C will be 60 and 40, respectively. In this case, we need to find the weighted average sale price, which is derived as follows, It is the type of cost which is not dependent on the business activity. The following table gives a breakdown of the price, variable costs, and the expected number of units to be sold and let us assume the fixed cost Fixed Cost Fixed Cost refers to the cost or expense that is not affected by any decrease or increase in the number of units produced or sold over a short-term horizon. Let us take the case of a multiproduct company producing three different kinds of products named A, B, and C and try to find the breakeven number of units. It means by selling up to sales value of $30,000, XYZ Ltd will be in breakeven point and will overcome its fixed cost only and will earn profit equal to the sales value beyond $30,000 equal to contribution margin * Sales value beyond $30,000. It is calculated by dividing the company's total fixed expenses by the contribution margin percentage.
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