This preview shows pages 1–2. Sign up to view the full content.
Sales mix is the proportion in which two or more products are sold. For the calculation of break
even point for sales mix, following assumptions are made in addition to those already made for
CVP analysis:
1.
The proportion of sales mix must be predetermined.
2.
The sales mix must not change within the relevant time period.
The calculation method for the breakeven point of sales mix is based on the contribution
approach method. Since we have multiple products in sales mix therefore it is most likely that we
will be dealing with products with different contribution margin per unit and contribution margin
ratios. This problem is overcome by calculating weighted average contribution margin per unit
and contribution margin ratio. These are then used to calculate the breakeven point for sales
mix.
The calculation procedure and the formulas are discussed via following example:
Example: Formulas and Calculation Procedure
Following information is related to sales mix of product A, B and C.
Product
This preview has intentionally blurred sections. Sign up to view the full version.
View Full Document
This is the end of the preview. Sign up
to
access the rest of the document.
 Spring '09
 Stangota
 Managerial Accounting

Click to edit the document details