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XY sells two products for which the budgeted contribution to sales ratios are as follows:
Total budgeted sales revenue is $920,000, of which $368,000 will be generated by product X. The products must be sold in a constant mix.
Budgeted fixed costs are $105,000.
What is the budgeted breakeven sales revenue?
Give your answer to the nearest $.
Suggested Answer: A
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32 comments · newest first
MA
Madelyn
10 months ago
Fixed costs are $105,000, just a heads up!
NI
Nicholle
10 months ago
Totally agree, $500,000 sounds right!
BI
Billye
11 months ago
I think it's around $500,000 based on the ratios!
SA
Santos
11 months ago
Wait, are we sure about those numbers? Seems off.
LO
Lorenza
11 months ago
The breakeven point is where total revenue equals total costs.
CA
Cassi
11 months ago
I’m a bit lost on how the constant mix affects the calculations. Does it mean we just add the contributions together?
KA
Kara
12 months ago
I practiced a similar question where we had to find the breakeven point using fixed costs and contribution margins. I hope it’s the same approach here.
JU
Justine
12 months ago
I think we need to find the total contribution first, right? Then we can use that to figure out the breakeven revenue.
JO
Jospeh
12 months ago
I remember we calculated breakeven points in class, but I’m not sure how to apply the contribution ratios here.
SH
Shenika
1 year ago
Ugh, I hate these types of questions. Too many moving parts to keep track of. Guess I'll just try to remember the basic steps and hope I can piece it together on the fly. Wish me luck!
RE
Reed
1 year ago
Alright, let's do this! I've got the breakeven formula down - it's just total fixed costs divided by the contribution margin per unit. Now I just need to calculate the contribution margin for each product and then find the weighted average. Should be straightforward enough.
JO
Johnna
1 year ago
Hmm, not sure I fully understand the question. What's this "constant mix" thing they're talking about? And how do I use the contribution to sales ratios to find the breakeven point? Might need to review my notes on this.
TE
Tequila
1 year ago
Okay, this looks like a classic breakeven analysis problem. I think I can handle this - just need to remember the formula and plug in the right numbers.
BA
Barney
1 year ago
Breakeven, huh? Well, I guess that's where you don't make any money, but at least you're not losing any either. Sounds like a party! Let's crunch those numbers and see where the magic happens.
TH
Thersa
1 year ago
So, the total contribution margin ratio is 1.0. Let's calculate the breakeven sales revenue.
TE
Tenesha
1 year ago
Product X has a contribution to sales ratio of 0.4, while Product Y has a ratio of 0.6.
GL
Glory
1 year ago
The budgeted breakeven sales revenue is $460,000.
GI
Giovanna
1 year ago
Product X contribution to sales ratio is 0.4 and Product Y contribution to sales ratio is 0.6.
LO
Louann
1 year ago
This is a tricky one, but I think I've got it. The key is to use the fixed costs and the contribution to sales ratios to find the breakeven sales revenue. Shouldn't be too hard if we break it down.
LE
Leanna
1 year ago
Then we can use the formula: Breakeven Sales Revenue = Fixed Costs / Contribution Margin Ratio
BE
Belen
1 year ago
Let's start by calculating the total contribution margin for both products.
VI
Vicky
1 year ago
I'm not sure about that, I think we need to calculate the contribution margin ratio first to find the breakeven sales revenue.
JA
Jaime
1 year ago
I agree with Genevieve, the answer must be $500,000 because that's the point where total revenue equals total costs.
GE
Genevieve
1 year ago
I think the budgeted breakeven sales revenue is $500,000.
EA
Earlean
1 year ago
Okay, let's think this through step-by-step. If the total budgeted sales revenue is $920,000 and $368,000 is generated by product X, then the remaining revenue must be from product Y. Now we can use the contribution to sales ratios to calculate the breakeven sales revenue.
HA
Hassie
1 year ago
The budgeted breakeven sales revenue can be calculated by setting the total contribution margin equal to fixed costs.
LA
Laura
1 year ago
So, for every $1 of sales revenue from product X, $0.40 is contributed towards covering fixed costs.
AL
Alton
1 year ago
Product X has a contribution to sales ratio of 0.4, and product Y has a ratio of 0.6.
JA
James
1 year ago
Hmm, this looks like a classic contribution margin problem. Let's see, we have the budgeted contribution to sales ratios and the total budgeted sales revenue. Looks like we need to find the breakeven sales revenue.
TR
Truman
1 year ago
The budgeted breakeven sales revenue is $500,000.
TE
Teri
1 year ago
So, the total contribution margin ratio is 1.0. We can use this to calculate the breakeven sales revenue.
JA
Janessa
1 year ago
Product X has a contribution to sales ratio of 0.4 and product Y has a ratio of 0.6.