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  • 1.  question part 2 cvp

    Posted 01-13-2023 07:39 AM
    hi dears
    Question: 22 Mason Enterprises has prepared the following budget for the month of July:
    Selling Price Variable Cost Unit


    Per Unit Per Unit Sales
    Product A $10.00 $4.00 15,000
    Product B 15.00 8.00 20,000
    Product C 18.00 9.00 5,000
    Assuming that total fixed costs will be $150,000 and the mix remains constant, the
    breakeven point (rounded to the next higher whole unit) will be

    A. 21,429 units.
    B. 20,455 units.
    C. 6,818 units.
    D. 21,819 units

    why the answer d

    i am try to solve as it is 

                                               a       b          c
    cm                                       6      7           9
    weighted average            .375    .175      .225            

    i am get the weighted averge as 15+20+5= 40  so a= 6/40 =.375 and so on

    then wa cm per unit = (6*.375+7*.175+9*.225) = 5.5
    when i divided on 150000/5.5 =27272 units 

    where the wrong on my solution




    ------------------------------
    Sameh Mahmoud Ismail
    Accountant
    Giza
    Egypt
    ------------------------------


  • 2.  RE: question part 2 cvp

    Posted 01-14-2023 01:17 AM

    I'm just starting Part 2 and haven't gotten to this section yet but if you are using Weighted average, to get answer D you will need to get the total sales for each product, sum them up and divide that total by the total # units. This will give you the weighted average CM. Then you divide the fixed cost by this weighted  average contribution margin and that's how you get D

    Total sales = CM * Number of Units sold
    Product A = (10-4) * 15,000 = 90,000
    Product B = (15-8) * 20,000 = 140,000
    Product C = (18-9) * 5,000 = 45,000
    Total sales = 90,000 + 140,000 + 45,000 = 275,000
    Total units = 15,000 + 20,000 + 5,000 = 40,000
    ​Weighted average Contribution Margin/unit = 275,000/40,000 = $6.875/unit
    Break Even = FC/CM = 150,000/6.875 = 21,818 - answer D

    ​

    ------------------------------
    Laurence Heraux
    Director/Manager
    Chula Vista CA
    United States
    ------------------------------

    Original Message


  • 3.  RE: question part 2 cvp

    Posted 01-14-2023 01:24 AM
    Dear Samesh,

    For getting weighted Average you must apply sales % to Per Unit Contribution as Sales Mix has given.

    Based on that you will get the ans  21818.18 Units as BEP quantity is being asked.

    Hope this will help you.


    ------------------------------
    SUDHIR LEVI
    Chief Financial Officer
    New Delhi
    India
    ------------------------------

    Original Message


  • 4.  RE: question part 2 cvp

    Posted 01-14-2023 01:34 AM
    Bro take percentage on sales u have percentage from contribution 




    Original Message


  • 5.  RE: question part 2 cvp

    Posted 01-14-2023 06:02 AM
    Hi Sameh, 

    Total Units = 40,000

    Product A  = 15,000 / 40,000 = 0.375
    Product B  = 20,000 / 40,000 = 0.50
    Product A  =   5,000 / 40,000 = 0.125

    WACM = 6 * 0.375 + 7 * 0.50 + 9 * 0.125 = 2.25 + 3.5 + 1.125 = 6.875

    Breakeven Units = 150,000 / 6.875 = 21,818

    ------------------------------
    Brian Ruskolekier
    Controller
    Buenos Aires
    Argentina
    ------------------------------

    Original Message