Respected Sir, plz explain this Question's Answer.....
A Co makes two products, nail polish and lipsticks.
Nail polish sales make up 30% of total sales and their variable costs are 45% as a percentage
of sales value.
Lipsticks sales are 70% of the total sales and their variable costs are 40% as a percentage of
sales value.
Total fixed costs are $400,000 for the company.
Required:
What is break-even level of sales revenues for the company?
ACCA Forums
PMCVP
9y ago#1Have you watched the free lectures on CVP?
You can calculate the CS ratios for each of the two products ( A 55% and B 60%).
So you then calculate the average CS ratio.
Then, as always, breakeven sales revenue is equal to the fixed overheads divided by the average CS ratio.
is the average (0.55+0.6)/2 or (0.3*0.55) +(0.7*0.6)
9y ago#3The second - it is a weighted average.
Please watch the free lectures because I explain this in the lectures.
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