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Hello,
I would like to ask, how to know whether the demand number given is a weightage or simply just number to find budgeted sales. Will they mention explicitly that weightage is number or we need to assume demand in the budget statement is equals to weightage?
Thank you.
KimIf the cs ratio for each product individually
X = ($11/$16)= 68.75%
Y = ($5/$20)=25%
Z = ($3/$10)= 30%And the sales revenues for the budgeted mix are:
X 50,000 x $16 = $800,000
Y 10,000 x $20 = $200,000
Z 100,000 x $10 = $1,000,000
Total: $2,000,000So therefore the weighted average is calculated as (800/2,000 x 68.75%) + (200/2,000 x 25%) + (1,000/2,000 x 30%) = 45%.
Do watch John’s free lectures on CVP analysis where he explain this.
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