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Multi product volume graph | Chapter 5

Forums › Ask CIMA Tutor Forums › Ask CIMA P1 Tutor Forums › Multi product volume graph | Chapter 5

  • This topic has 1 reply, 2 voices, and was last updated 6 years ago by Cath.
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  • February 18, 2019 at 7:38 am #505571
    abbasisaeed
    Participant
    • Topics: 14
    • Replies: 2
    • ☆

    There are two lines in the graph. One straight line (standard mix) and the other bowed (according to c/s ratio).

    I wanted to ask whether The bowed line will always be above the straight?

    February 20, 2019 at 2:04 am #505817
    Cath
    Participant
    • Topics: 0
    • Replies: 448
    • ☆☆☆

    Hi – yes it will. The bowed line assumes that products are sold in order of most profitable first- eg sales will be made in order of the highest individual c/s ratio first. Therefore the bowed/ bent/ crooked line will be above the straight one because it shows how selling most profitable products will result in breakeven point being earlier than the straight line ( which assumes sales in standard sales mix proportions).
    Many Thanks
    Cath

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