Wednesday, October 9, 2019
Breakeven Point of Sales for Accounting
IN UNITS=         TOTAL FIXED COST                 (Bazley, Hancock & Robinson, 2014).                       CONTRIBUTION PER UNIT IN DOLLARS=    TOTAL FIXED COST                (Cafferky, 2010).                                 P/V RATIO Variable Manufacturing Cost Per Unit Proportionate Contribution Per Unit Weighted average contribution per unit P/V Ratio (Contribution Per Unit/Selling Price Per Unit)  Breakeven sales (units) = IN UNITS=        TOTAL FIXED COST                                                                   CONTRIBUTION PER UNIT                                                                        = $270,000                                                                              $10.15                                                                                                                                              = 26601 units  Now 26601 units have been divided in the proportion of 1:1:3 (as determined above) between the products viz. Squid, Proud Stash and Private zoo. Squid            =26601  x 1  = 5320 units Proud Stash = 26601  x 1 = 5320 units Private Zoo = 26601   x 3  =15961 units Breakeven sales (units) = IN DOLLARS=   TOTAL FIXED COST                                                                                                P/V RATIO                                                                   = $270,000                                                                         11.01%                                                                   = $ 2452202 (difference in the sales amount because of rounding off the percentage of P/V ratio to 11.01%) Now sales of $245220 has been divided into the proportion of 1:1:3 (as determined above) between the products viz. Squid, Proud Stash and Private zoo. Squid            = $2452202  x 1  = $490440 Proud Stash = $2452202  x 1  = $490440                                  5 Private Zoo = $2452202  x 3  = $1471321                                  5 Weighted average p/v ratio=  (18.75%x 0.2*)  +  (14.10%x 0.2)  +   (7.40%x 0.6 # )  =11.01% (The percentage figure has been rounded off and due to this reason there could be slight variation in the amount of breakeven sales figure.)#0.2 = 1/5 Weighted average contribution per unit= (12x 0.2)    +   (11x 0.2)    +    (9.25x 0.6)                                                                        = $10.15 Cafferky, M., 2010. Breakeven Analysis: The definitive guide to cost-volume-profit analysis. Business Expert Press.
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