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EC LTD produces and sells the following two products throughout the year in a constant mix:
product x
vc per $ of sales $0.45product y
vc per $ of sale $0.60fixed cost are $1,212,000 per period.
the management of EC has stated that total sales revenue will reach a maximum of $4,000,000 and is generated by the two products in the following proportions:
product x
vc per $ of sales 70%product y
vc per $ of sale 30%question: calculate the breakeven sales revenue required per period, based on the sales mix assumed above.
the answer is $2,400,000please explain how to calculate the c/s ratio I this question.
You have not copied the question correctly.
What you should have typed is that Product X is 70% of sales and Product Y is 30%.So every $100 sales, X sales are $70 and the contribution is 0.55 x 70 = $38.50; and Y sales are $30 and the contribution is 0.40 x 30 = $12.
Therefore the total contribution is $50.50.
Therefore the CS ratio is 50.50/100 = 0.505.
no sir i have copied the question correctly from the kaplan kit. however the way you have answered the question is their working as well so i assume there is some printing error in my kit.
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