Crunches started a business of making potato chips in three variants, Classic Cheese, Toasted Corn and Tangy Tomato. Fixed costs are Rs.38,000. Sales price and variable costs per unit are given. Packets Sold: Classic Cheese 100, Toasted Corn 40, Tangy Tomato 60. From the given information calculate: a) Weighted contribution margin per unit. b) Breakeven point in units per product. c) Breakeven point in rupees total and per product.

Question

Accepted Answer

Given:
- Fixed Costs = ₹38,000
- Classic Cheese (CC): SP = ₹15, VC = ₹9, CM = ₹6
- Toasted Corn (TC): SP = ₹21, VC = ₹14, CM = ₹7
- Tangy Tomato (TT): SP = ₹36, VC = ₹19, CM = ₹17
- Packets Sold: CC = 100, TC = 40, TT = 60 (Total = 200)
- Sales Mix: CC = 50%, TC = 20%, TT = 30%

**(a) Weighted Contribution Margin per unit:**
= (6 × 0.50) + (7 × 0.20) + (17 × 0.30)
= 3.00 + 1.40 + 5.10
= **₹9.50 per unit**

**(b) Break-Even Point in units per product:**
Total BEP (units) = Fixed Costs / Weighted CM
= 38,000 / 9.50 = **4,000 units**

Per product:
- Classic Cheese: 4,000 × 50% = **2,000 packets**
- Toasted Corn: 4,000 × 20% = **800 packets**
- Tangy Tomato: 4,000 × 30% = **1,200 packets**

**(c) Break-Even Point in rupees:**
- Classic Cheese: 2,000 × ₹15 = ₹30,000
- Toasted Corn: 800 × ₹21 = ₹16,800
- Tangy Tomato: 1,200 × ₹36 = ₹43,200
- **Total BEP (₹) = ₹90,000**

Verification: Total Revenue at BEP = 30,000 + 16,800 + 43,200 = ₹90,000. Total Variable Cost = (2,000 × 9) + (800 × 14) + (1,200 × 19) = 18,000 + 11,200 + 22,800 = ₹52,000. Contribution = 90,000 − 52,000 = ₹38,000 = Fixed Cost. Hence verified.