C-v-p analysis – multiple products, Managerial Accounting

C-V-P ANALYSIS – MULTIPLE PRODUCTS

The simple product CVP analysis can be extended to handle the more realistic situations where the firm produces more than one product. The objective in such a case is to produce a mix that maximizes total contribution.

 Total BEP units = Total fixed cost

                            Average CM

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Here:

αt is the sales mix of product  t.

St is the selling price of product t

Vt is the variable cost of product t.

n is the number of units of product t sold

 
BEPt units = αt (Total BEPunits)

BEP tsh. = BEPt(units) xSt

 

Posted Date: 12/5/2012 7:17:51 AM | Location : United States







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