Sales Mix Break Even

Sales Mix Break Even - Sales mix is the proportion in which...

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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 break-even 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 break-even 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.
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