Question

Suleman Limited produces three products. Details are as under:

A B C
Selling Price 140 80 210
Variable Cost 70 44 147
Expected sales 12,500 17,500 10,000

Annual fixed costs per anum are expected to be Rs 1,110,200.

Required
calculate break even in Units and in Rs

Solution
A B C
Selling Price 140 80 210
Variable Cost per unit (70) (44) (147)
CM per unit 70 36 63
CM Ratio 50.00% 45.00% 30.00%
Ratio in Units 12.50 17.50 10.00
Ratio in Rs 1,750 1,400 2,100

Break Even in Units

CM of a Comp Unit 875 630 630 2,135

Fixed Cost 1,110,200

Composites (Break-Even) 520

Units in a comp Total Units
A 12.50 6,500 12.5x520
B 17.50 9,100 17.5x520
C 10.00 5,200 10.0x520

Break Even in Rupees

CM of a Comp Unit 875 630 630 2,135

(1750x50%) (1,400x45%) (2,100x30%)

Total Sales in a composit (Rs) (1,750+1,400+2,100) 5,250

Weighted average CM Ratio for the company (2,135/5250) 40.667%

Fixed Cost 1,110,200

Break even in Rupees 2,730,000

Ratio in Rupees Rupees to BE

A 1,750.00 910,000 2.73x1750/5250
B 1,400.00 728,000 2.73x1400/5250
C 2,100.00 1,092,000 2.73x2100/5250
5,250.00 2,730,000

Question 2

Following is the budgeted sales of 3 products of Jamal and copmany:

X Y Z Total
Sales (Rs) 5,100,000 6,750,000 3,150,000 15,000,000
Variable Cost 2,320,500 3,543,750 1,496,250 7,360,500
Annual Fixed Cost 5,831,485

Required
Calculate break even point in Rs.

Total Sales 15,000,000

Total Variable Cost (7,360,500)
Total CM in Rupees 7,639,500
CM Ratio for the company 50.93%

Annual Fixed Cost 5,831,485

Break Even in Rupees 11,450,000

Breakup
A B C
Ratio 34.00% 45.00% 21.00% (Sales/Total Sales)

BE Sales in Rupees 3,893,000 5,152,500 2,404,500 11,450,000