Question

Also calculate break-even point in rupees.

Hint:

To quickly calculate break-even revenue, use the WASP method: $$\text{Break-Even Revenue} = \text{Composite BEP Units} \times \text{Weighted Average Selling Price}$$ This provides a fast, reliable way to verify your results on exams.

Answer 1

Step 1: Recalling individual Product volumes and prices:
From our previous calculations, the sales volumes and prices for each product at the break-even point are: Chocolate Cake Units (Q_c) &= 680 units | Selling Price (SP_c) = Rs. 200
Vanilla Cake Units (Q_v) &= 1,020 units | Selling Price (SP_v) = Rs. 150

Step 2: Calculating break-even revenue by summing individual product sales:
To find the total break-even revenue, we calculate the sales revenue for each product and sum them together: Break-Even Revenue = ( Q_c \times SP_c ) + ( Q_v \times SP_v ) Substitute our values: Revenue from Chocolate Cake &= 680 \times Rs. 200 = Rs. 1,36,000
Revenue from Vanilla Cake &= 1,020 \times Rs. 150 = Rs. 1,53,000
Total Break-Even Revenue &= Rs. 1,36,000 + Rs. 1,53,000 = Rs. 2,89,000

Step 3: Verifying using the Weighted Average Selling Price (WASP) method:
We can double-check this result by calculating the Weighted Average Selling Price: WASP &= (200 \times 0.40) + (150 \times 0.60)
WASP &= 80 + 90 = Rs. 170 per composite unit
Break-Even Revenue &= Total Composite Units \times WASP
Break-Even Revenue &= 1,700 \times 170 = Rs. 2,89,000 Both methods yield the same result. The total break-even sales revenue is Rs. 2,89,000.