Profit-volume graph and changes in sales mix A company produces and sells two products with the following costs:

Required:

(a) Calculate the break-even sales revenue per period, based on the sales mix assumed above.

(b) Prepare a profit-volume chart of the above situation for sales revenue up to £4000 000.
Show on the same chart the effect of a change in the sales mix to product X 50%, product Y 50%. Clearly indicate on the chart the breakeven point for each situation. (11 marks)

(c) Of the fixed costs £455 000 are attributable to product X. Calculate the sales revenue required on product X in order to recover the attributable fixed costs and provide a net contribution of £700000 towards general fixed costs and profit.

Transcribed Image Text:

Product X Product Y Variable costs 0.45 0.6 (per of sales) Fixed costs 1212000 1212000 per period Total sales revenue is currently generated by the two products in the following proportions: Product X 70% Product Y 30%