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Multi Products

Multi Products

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Published by Sumit Hukmani

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Published by: Sumit Hukmani on Oct 06, 2012
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05/13/2014

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MULTI PRODUCTS

Multi products When there are multiple products, different products have different pv ratios because of different selling prices and variable costs. Some products make larger contribution to fixed cost recovery and profit than others. The total profits depends to some extent upon the proportions in which the products are sold.

Sales mix and breakeven point Sales mix is the relative proportion of each product line to the total sales of various products sold by an enterprise. If there are no constraints or limitations, the management should try to maximise the sale of product with higher PV ratio. There are the limits to quantities of any given product that can be produced and there may also be certain market limitations on how much can be sold.

• A ltd produces 3 products. A B C Price per unit 50 60 70 Variable cost p.u. 30 20 40 sales units 100000 150000 250000 Total fixed cost for the company are Rs.124,00,000. compute overall Pv ratio and overall break even point.

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• Calculate effect of change in sales mix? • Calculate overall BEP and PV ratio? m n o p Sales 40,000 50,000 20,000 10,000 V.c. 24,000 34,000 16,000 4,000 The sales mix changed to 30,000 44,000 40,000 6,000 The total fixed cost Rs.29,400

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A ltd produces 3 types of products, the data are given below. Fixed cost Rs.64,76000. milling Drilling Shaping Sales units 600 400 100 Selling price p.u.20,000 18,000 17,000 V.c.per unit 14,000 12,500 12,000 Contribution p.u.6,000 5,500 5000  calculate the BEP if sales mix changed to 45%, 35% and 20%?

Directors propose to discontinue product C and the 4 be transferred to other production of product C to products equally. Do you agree.The cost p.u. are A B C

Direct material
Direct labour Variable exp.

10
6 4

8
7 5

9
6 3

Fixed cost
No. of units Profit Selling price

3
10,000 9 32

3
5,000 7 30

2
8,000 6 26

A co. manufactures 3 different products. The total fixed cost Rs.1.80 lakhs and sales Rs.6 lakhs. S T Y Sales mix 35% 35% 30% Selling price 30 40 20 Variable cost 15 20 12
The co. has currently under discussion to discontinue product Y and replace it with prod. M. the sales mix are --- s 50%, T 25% and M 25%. The selling price & variable exp p.u. for product M are Rs. 30 & 15. The total fixed cost are 1,80,000 and total sales 6,40,000.

M ltd produces 3 products. The following estimates are made
Particulars Sales Variable cost A 1,50,000 1,20,000 B 90,000 63,000 C 60,000 36,000 Total 3,00,000 2,19,000

Fixed cost

40,500

You are required to show how PV ratio analysis will aid mgt in changing sales mix inorder to increase profits of the company.

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