04/19/2023

Cost Accounting

Breakeven with Multiple ProductsTwo Product Example [methods work for more than 2 products]

ProductAlpha Beta Total

p 10 25

v 6 10cm 4 15

F 3900

Q 500 300 800 historical

or

R 5000 7500 12500 projected

V 3000 3000 6000 mix

CM 2000 4500 6500F 3900I 2600

cmr 0.52

Q 975 0 975 product

Alpha

R 9750 0 9750 only

V 5850 0 5850 breakeven

CM 3900 0 3900

F 3900

I 0

cmr 0.4

Q 0 260 260 product

Beta

R 0 6500 6500 only

V 0 2600 2600 breakeven

CM 0 3900 3900F 3900I 0

cmr 0.6

Q 375 160 535 alternate

mix

R 3750 4000 7750 breakeven

V 2250 1600 3850 one

CM 1500 2400 3900F 3900I 0

cmr 0.503225806

Q 225 200 425 alternate

mix

R 2250 5000 7250 breakeven

V 1350 2000 3350 two

CM 900 3000 3900F 3900I 0

cmr 0.537931034

Q 300 180 480 same

mix

R 3000 4500 7500 breakeven

V 1800 1800 3600CM 1200 2700 3900F 3900I 0

cmr 0.52

BER = F / cmr = 3900 / .52 = 7500

[10 * QA] + [25 * QB] = 7500QA / QB = 500 / 300QA = [500 * QB] / 300 = [5 / 3] * QB[10 * [5 / 3] * QB] - [25 * QB] = 7500QB = 180QA = 300

Q 300 180 480 solution

based on

R 3000 4500 7500 cmr

V 1800 1800 3600

CM 1200 2700 3900F 3900I 0

cmr 0.52

alternative way to get to the same 300, 180 quantities:

average contribution per unit at the 5 : 3 mix:

average cm = [4 * [5 / 8]] + [15 * [3 / 8]] = [65 / 8]

BEQ = F / cm = 3900 / [65 / 8] = 480

480 * [5 / 8] = 300

480 * [3 / 8] = 180

Q 500 300 mix quantities

p 10 25 product solution

v 6 10 unit based on

cm 4 15 data "bundle"

concept

Q 5 3 minimum bundle, same mix

p 125 bundle

v 60 data

cm 65

3900 / 65 = 60 breakeven bundles

60 * 5 60 * 3

Q 300 180 mix quantities

bundleR 3000 4500 7500V 1800 1800 3600

CM 1200 2700 3900F 3900I 0

cmr 0.52