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A company sell two products J & K . Annual sales to be in the ratio of J:1 K:3. Total Sales are planned to be $420,000. Product J has a contribution to sales ratio of 40% whereas that of the product K is 50%. Annual fixed cost are estimated to be $120,000.
What is the budgeted break-even sales value?
Please help.
Why are you attempting a question for which you do not have an answer? You should be using a Revision Kit from one of the ACCA Approved Publishers – they have answers and workings.
The average CS ratio is ((1 x 0.4) + (3 x 0.5)) / 4 = 0.475
Therefore the breakeven sales are 120,000/0.475 = $252,632
I do suggest that you watch my free lectures on multi-product CVP analysis.
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