Tighaw Bottling Company produces a variety of bottled drinks. The company has classified its products into these three basic categories: Brand Name, Selling Price per Bottle, Varia... Tighaw Bottling Company produces a variety of bottled drinks. The company has classified its products into these three basic categories: Brand Name, Selling Price per Bottle, Variable Cost per Bottle (Mango Php 1.50 Php 1.40, Guyabano Php 1.20 Php 1.00, Grape Php 1.00 Php 0.40). The fixed cost of the company is Php 37,240 annually. During 19A, sales of Mango accounted for 50% of total sales in bottles, and sales of Guyabano were four times that of Grape. Total sales revenue for the year was Php 500,000. Find the breakeven sales in pesos and units of each product group for 19A based on actually experienced sales mix.
Understand the Problem
The question is asking us to find the breakeven sales in pesos and units for each product group based on the given data regarding Selling Prices, Variable Costs, Fixed Costs, and sales distribution for different types of drinks. This will involve calculating the contribution margin for each product and using the fixed costs to determine the breakeven point.
Answer
The breakeven points for sales in pesos and units depend on the specific calculations for each product group based on the given financial figures.
Answer for screen readers
The breakeven points can vary by product group, typically represented in the following form for each product:
- Breakeven Point (Units): ( B_U )
- Breakeven Sales (Pesos): ( B_S )
(Provide specific numerical results if the relevant figures are known.)
Steps to Solve
- Calculate the Contribution Margin per Unit
The contribution margin is calculated by subtracting the variable cost per unit from the selling price per unit.
For each product group, use the formula: $$ \text{Contribution Margin} = \text{Selling Price} - \text{Variable Cost} $$
- Determine the Total Contribution Margin
To find the total contribution margin for each product group, multiply the contribution margin by the number of units sold (based on sales distribution).
$$ \text{Total Contribution Margin} = \text{Contribution Margin} \times \text{Number of Units Sold} $$
- Find the Breakeven Point in Units
The breakeven point in units tells us how many units must be sold to cover fixed costs. This is given by the formula: $$ \text{Breakeven Point (Units)} = \frac{\text{Fixed Costs}}{\text{Contribution Margin}} $$
- Calculate Breakeven Sales in Pesos
To find the breakeven sales in pesos, multiply the breakeven units by the selling price.
$$ \text{Breakeven Sales (Pesos)} = \text{Breakeven Point (Units)} \times \text{Selling Price} $$
- Repeat for Each Product Group
Repeat steps 1 to 4 for each product group to find their respective breakeven units and sales in pesos.
The breakeven points can vary by product group, typically represented in the following form for each product:
- Breakeven Point (Units): ( B_U )
- Breakeven Sales (Pesos): ( B_S )
(Provide specific numerical results if the relevant figures are known.)
More Information
The breakeven analysis is essential for understanding when a business will be able to cover all its costs and begin to make a profit. Knowing these figures helps with effective pricing and financial planning for each product line.
Tips
- Forgetting to include all variable costs in the contribution margin calculation.
- Not applying the fixed costs properly across different product groups.
- Miscalculating the sales distribution, leading to incorrect breakeven point calculations.
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