MULTIPRODUCT BREAKEVEN CALCULATION

EXAMPLE QUESTION

There is a store, selling Sandwiches, Soft Drinks, Baked Potatoes, Tea and Salad Bar. The fixed
cost is given to us about the store that is $3,500 per month and $42,000 for year. We have also
given the table for variable cost, forcasted sales and price of each product.

Item Price Variable Cost Per Unit Forcast Sales

Sandwiches $2.95 $1.25 7000
Soft Drink $0.80 $0.30 7000
Baked Potatos $1.55 $0.47 5000
Tea $0.75 $0.25 5000
Salad Bar $2.85 $1.00 3000

Annual Forcasted
Item Price (P) Variab Cost (V) V÷P 1-V÷P Sales % Of Sales Weight
Sandwiches $2.95 $1.25 0.42 0.58 $20,650 0.446 0.257
Soft Drink $0.80 $0.30 0.38 0.63 $5,600 0.121 0.076
Baked Potatos $1.55 $0.47 0.30 0.70 $7,750 0.167 0.117
Tea $0.75 $0.25 0.33 0.67 $3,750 0.081 0.054
Salad Bar $2.85 $1.00 0.35 0.65 $8,550 0.185 0.120
$46,300 1.000 0.623

Breakeven Calculation For Each Product

Item Fixed Cost (F.C) 1-V÷P % Of Sales Breakeven ($)

Sandwiches 42000 0.58 0.446 163,412
Soft Drink 42000 0.63 0.121 555,600
Baked Potatos 42000 0.70 0.167 360,111
Tea 42000 0.67 0.081 777,840
Salad Bar 42000 0.65 0.185 350,378

Here is the over all calculation for the breakeven point for all the product. We will use the
formula given above on the top of the page.

Breakeven Point For All 3500 X 12

= = $67,404
The Products For 1 Year 0.623