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Notes - Lecture 3.4 PDF

The document discusses sales mix and how it affects break-even analysis for companies that sell multiple products. Sales mix refers to the proportion of total sales generated by each product. Different products have varying costs, prices, and contribution margins. When a company sells more than one product, calculating the break-even point becomes more complex as the sales mix between products impacts total revenues and costs. The example shows how sales mix must remain constant to accurately compute break-even for a bicycle and cart company.

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Sakiful Islam
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44 views

Notes - Lecture 3.4 PDF

The document discusses sales mix and how it affects break-even analysis for companies that sell multiple products. Sales mix refers to the proportion of total sales generated by each product. Different products have varying costs, prices, and contribution margins. When a company sells more than one product, calculating the break-even point becomes more complex as the sales mix between products impacts total revenues and costs. The example shows how sales mix must remain constant to accurately compute break-even for a bicycle and cart company.

Uploaded by

Sakiful Islam
Copyright
© © All Rights Reserved
Available Formats
Download as PDF, TXT or read online on Scribd
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Sales Mix – The Concept

• Sales mix is the relative proportion in which a company’s products are sold.

• Different products have different selling prices, cost structures, and contribution
margins.

• When a company sells more than one product, break-even analysis becomes more
complex as the following example illustrates.

Sales Mix – Illustrations

Let us assume Racing Bicycle Company sells bikes and carts and that the sales mix between
the two products remains the same.

1
Break-Even Computations

Exercises: 5-10, 5-12, 5-21 (2)

Core Reading/Textbook

Garrison, Ray, H., Noreen, Eric, W., & Brewer, Peter, C. (2015). Managerial Accounting. [15th
Edition]. The McGraw-Hill, New York, USA.

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