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In example 6 of the notes on multi-product CVP we assume that the budget mix of production remains unchanged which means that all the production units are made in the same ratio. So we use weighted average figures (ie Total figures)
But I wonder how do we calculate breakeven units in multi-products CVP if we do not assume that the production mix remains unchanged which means that production mix is not produced in the same ratio (using the same example 6)?
We can be asked this question in section C but the question will clear whether the production mix remains unchanged or not. (correct?)
I do work through this in the last part of the lecture (we produce in the order of their CS ratios when the mix does not remain unchanged).
The wording of the question will make it clear whether or not to assume that the production mix remains unchanged.
Thanks for that 🙂
Is it also correct that all the fixed costs of $8000 would be deducted from the first product to be produced according to their C/S ratio. Since Product P would be made first so all the fixed costs would be less from the total contribution of $31800.
However, if we suppose that the fixed cost is $32000 then it would be less from the total contribution of Product P and Product C according to their respective C/S ratios.
Is that true too?
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