Answer to Question #317423 in Finance for Maham

Question

From the following data of Megh Enterprises.

a. Calculate the combined breakeven sales. The Company is producing three products.

product, sales, Variable cost

A 10000 6000

B 5000 2500

C 5000 2000

The company incurred a fixed cost of Rs 5700.

b. Also, Discuss the concept and relevance of Breakeven sales for an enterprise

Answer 1

$Breakeven sales = \frac {fixed costs * sales}{sales - variable costs}$

Fixed costs = 5700

Sales = $10000+5000+5000 = 20000$

Variable costs = $6000+2500+2000 = 10500$

$Breakeven sales = \frac {{5700}\times{20000}}{20000 - 10500}$

$Breakeven sales = \frac{114000000}{9500}$

Breakeven sales = 12000