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-   -   Break Even Sales Revenue Accounting Question (https://www.askmehelpdesk.com/showthread.php?t=806172)

  • Dec 24, 2014, 03:03 PM
    sagnik2422
    Break Even Sales Revenue Accounting Question
    Lincoln Corporation produces and sells two produtcs : Standard and Deluxe. The info on the two products sold for the last month is given below. The common fixed cost is $15,000.
    Standard : Sales : $45,000 Variable Expenses : $36,000
    Deluxe : Sales : $33,000 Variable Expenses : $16,500
    Suppose total sales reveue for the coming month stays the same, but the sales (revenue) mix changes such that Deluxe increases by 20% (i.e. additional 20% to current %) and Standard decreases by 20% from the present levels. What will be the impact of this change on the break even sales revenue of Lincoln?
    Answer was Break Even sales will decrease by $7,115 but I don't get how , please show help with steps.


    MY WORK : I was really lost and calculated profit volume ratio to be 32.69% but got no further
  • Dec 27, 2014, 07:10 PM
    paraclete
    How hard can it be?
    standard contribution margin $9,000 = 20%
    delux comtribution margin $16,500 = 50%
    what is the breakeven point?
    Pv =15000/( 78000 - 52500) = 15000/25500 =

    every dollar of sales where delux replaces standard increases contribution margin by 30%

    standard contribution margin = 20% i.e. variable expense = 80% therefore a change 20% on sales reduces sales $9000 and contribution margin by $1800
    Delux contribution margin = 50% i.e. variable expense =50% there for a change of 20% increases sales by 6600 and contribution margin by $3300
    what is the breakeven point?
    Pv =15000/( 75600 - 54000) = 15000/21600 =


    all you need to do is make all the calculations at least once

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