Unformatted text preview: by the sales mix.
The sales mix is the number of units sold of a given product relative to the total units
sold by the firm. For example, if a company sells 8,000 units of product A and 2,000
units of product B, the sales mix is 80% A and 20% B.
Step 2: A weighted-average unit contribution margin is calculated by multiplying a product’s
contribution margin by its sales mix percentage, and then summing the results for individual
products. (Note: the sales mix must keep constant all the time, otherwise, this doesn’t work.)
Step 3: The result is divided into fixed expenses (as before) to arrive at the break-even point in
“weighted-average units” (“Baskets”).
Step 4: As a final step, the sales-mix percentages are multiplied by the number of “weightedaverage units” to calculate individual product sales to break even. It should be evident that a
change in a firm’s sales mix will alter the...
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