August 2014
Intermediate to advanced
172 pages
3h 14m
English
Content preview from Breakeven Analysis
Become an O’Reilly member and get unlimited access to this title plus top books and audiobooks from O’Reilly and nearly 200 top publishers, thousands of courses curated by job role, 150+ live events each month,
Start your free trial


Dealing With Changes in Product Mix Using Weighted Averages
As we have seen, product mix is one of the most important influences on breakeven point. Change the product mix, and if there are wide differences in variable costs and selling prices in the mix, the profitability can change quickly.
In this chapter we will focus on two breakeven methods that employ weighted averages. The first is the weighted average contribution margin method, and the second is the weighted average selling prices method.
The Formula
The product mix can be used to determine the weighted average contribution margin as is shown in the following formula:
Breakeven Units (BEU) = Fixed Costs ÷ Weighted Average
Contribution Margin.
Breakeven and cost-volume-profit ...