Example 1
A company makes two products with the following characteristics:
Product X Product Y
Contribution to sales ratio 0.3 X 0.5 Y
Selling price per unit $3.00 X $4.80 Y
Maximum demand 8,000 units X 3,000 units Y
Fixed costs are $9,000.
What is the minimum revenue required for production to break even?
answer: 20400
hello john can you pls explain why this question is different, i am getting 24000 as it asks breakeven in revenue right??
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3y ago#1Different from what?
To break even as quickly as possible they will make the product giving the highest CS ratio first. I am guessing that you are using the average CS ratio but that assumes they manufacture both in the same ratio which is not what is stated here.
now that you have said, the one who has the highest c/s will make the units first, i dont know why i am messing even tho i know how to do it, the problem is i don't understand the topic, this highest ranking we do in limiting factor and throughput, now this is CVP. i just get confused so much.
3y ago#3Have you watched my free lectures on CVP analysis because I do explain both things.
The lectures are a complete free course for Paper PM and cover everything needed to be able to pass the exam well.
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