Multi Product Breakeven Calculation Example Question

MULTIPRODUCT BREAKEVEN CALCULATION EXAMPLE QUESTION There is a store, selling Sandwiches, Soft Drinks, Baked Potatoes, Tea and Salad Bar. The fixed cost is given to us about the store that is $3,500 per month and $42,000 for year. We have also given the table for variable cost, forcasted sales and price of each product. Item Sandwiches Soft Drink Baked Potatos Tea Salad Bar

Price $2.95 $0.80 $1.55 $0.75 $2.85

Variable Cost Per Unit $1.25 $0.30 $0.47 $0.25 $1.00

Forcast Sales 7000 7000 5000 5000 3000

Item

Price (P)

Variab Cost (V)

V÷P

1-V÷P

Annual Forcasted Sales

% Of Sales

Weight

Sandwiches Soft Drink Baked Potatos Tea Salad Bar

$2.95 $0.80 $1.55 $0.75 $2.85

$1.25 $0.30 $0.47 $0.25 $1.00

0.42 0.38 0.30 0.33 0.35

0.58 0.63 0.70 0.67 0.65

$20,650 $5,600 $7,750 $3,750 $8,550 $46,300

0.446 0.121 0.167 0.081 0.185 1.000

0.257 0.076 0.117 0.054 0.120 0.623

Breakeven Calculation For Each Product Item Sandwiches Soft Drink Baked Potatos Tea Salad Bar

Fixed Cost (F.C) 42000 42000 42000 42000 42000

1-V÷P 0.58 0.63 0.70 0.67 0.65

% Of Sales 0.446 0.121 0.167 0.081 0.185

Breakeven ($) 163,412 555,600 360,111 777,840 350,378

Here is the over all calculation for the breakeven point for all the product. We will use the formula given above on the top of the page. Breakeven Point For All The Products For 1 Year

=

3500 X 12 0.62

=

$67,404