Multiproduct Break Even Analysis
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- Опубликовано: 19 окт 2024
- This video shows you how to calculate the break-even point when a company sells multiple products or provides multiple services.
When a company sells more than one type of product or provides more than one type of service, you need to first calculate a weighted-average Unit Contribution Margin. Then you divided the total fixed cost by the weighted-average Unit Contribution Margin to get the break-even point (in terms of units).
The accuracy of the break-even point is dependent on the accuracy of the sales mix (e.g., the percent of the company's sales that are expected to be composed of each product).
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Your videos are all awesome. I always watch them when I cannot figure something out. Thank you so much.
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Thanks Cody!
Is it possible to calculate multiple break even using High-low method
Hello friends,
I have 1 question:
1/ I do not fully understand the influence of the formulas for calculating bonuses for sales on the formula for calculating BEP (Break-even point), specifically as follows:
bonus formula for salesmen: 0.05 * revenue per order
bonus formula for sales team lead: 0.01 * revenue per sales team
bonus formula for sales area (ASM): 0.01 * revenue per sales Area
bonus formula for sales director: 0.01 * revenue per country
Could you help?. Thank you.
How to get sales mix, if it's not given in question?
if you are given the budgeted sales you can calculate sales mix from that.If budgeted sales for product x is 6000 and for product y it is 18000 then, 6000 / 6000 + 18000 = 25% and for product y it will be like 18000 / 18000 + 6000 = 75%.Then calculate the rest.
Why can't we multiply the fixed cost by the percentage of each item within the sales mix, and then divide it by each individual contribution margin? For example, $40,000 of contribution margin per 'no financial need' student. Then, seeing as 50% of the sales come from these students, can't we say that 50% of our fixed costs will be covered by these students? I.e., 50% of $30 million = $15 million; hence, $15 million of these fixed costs are covered by ($15M / $40,000) 375 'no financial need' students. Why do we get a different answer by doing it this way?
Perfecto
In step one you can see, they multiply each different tuition fee CM (contribution margin) with the percentage of student. Each percentage means if there are 100 people, there will be 50 people will suitable for no financial need, 40 people suitable for moderate and 10 for high financial need. Which the three ratios can come from statistic calculation from past information.
However, if you look at the final answer of each tuition fee after multiplying the ratio, put back to reality, it doesn’t make sense, let look at the no financial need, the CM per student is 40000, how come the CM become less which is 20000 after multiply the ratio? That mean you only charge half of student? It doesn’t make sense, it is because remember after the multiplication of the ratio, it is no longer the CM of each of student, it is RATIO, What is it? you can look it like if there are 1 student, you will charge him all three kinds of financial support, you will have a CM 20000, 4000, and 0 for that one FAKE student, which is 24000, and yes the financial support would never happen like that, but if there are 100 students, everything will be make sense, there will have exactly 50 people of no financial need, 40 people with moderate need and 0 people with high need, if there are 200 students total, 100 students no financial need and 80 people with moderate and 20 people with high financial need. Now use the total CM 24000 to find the breakeven point, now you will have the breakeven point of 1250, instead of having 100 or 200 fake students like the examples I gave, now you have 1250 of that FAKE students, the next step is to find back how much each financial support occupied in this 1250 students, since all this fake student are well portion according to the ratio, you can just simply decrypt it by multiply the percentage.
Dear Friends,
I want to confirm:
If a company has passed the break-even point, why should we do variable costs minimums and maximum fixed costs then the profits will increase more?. Thank you.
my stupid problem doesn't even have a sales mix wtf.
if you are given the budgeted sales you can calculate sales mix from that.If budgeted sales for product x is 6000 and for product y it is 18000 then, 6000 / 6000 + 18000 = 25% and for product y it will be like 18000 / 18000 + 6000 = 75%.Then calculate the rest. I hope it helps.