Hi,
Seek for your guidance on the below question. Which of these method / answer is correct?
Mabel Co manufactures and sells tables and chairs in a standard mix of one table to four chairs.
The following information is available:
Product Table Chair
Variable cost per unit ($) 120 16
Contribution sales ratio 0.4 0.6
Annual fixed costs are $100,000.
What is the break-even point in sales revenue (to the nearest hundred dollars)?
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CVP analysis
Method 1 ( BPP book)
BEP in sales rev. = FC ÷ weighted avg C/S ratio
= 100,000 ÷ [(0.4 x 1) + (0.6 x 4) ÷ (1 + 4)
= $ 178,571.43
6y ago#2The correct method is the method that I show in my free lectures on multi-product CVP analysis.
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