Which of the following statements regarding the calculation of the breakeven poi

Question

Which of the following statements regarding the calculation of the breakeven point for a company that sells many different types of products is true? sales mix does not affect the calculation of the breakeven point sales mix changes, but the selling price of each product remains the same, the sales mix change has no on the breakeven point o calculate the weighted average contribution margin, divide the sum of the individual product contribution by the number of different products. If a company sells many diferent types of products, itis not possible to compute a breakeven point. of the above statements is true

Explanation / Answer

Dear Student,

Correct Answer is "to calculate weighted average contribution margin , divide the sum of the individual product contribution margin by the number of different products".

Explanation:

If a company is selling a single product than Break even point can be calculated by the formula fixed cost/ Contribution per unit.

However, in case of sales mix (i.e. company is producing and selling different products ) it becomes difficultt to calcultate contribution per unit. so, we calculate weighted average contribution margin , which can be calculted by :

total of contribution margin of sales mix/ total number of units produced.

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