Flavouright Foods Ltd. started a business of making nachos (corn 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 above information calculate: (a) Weighted contribution margin per unit. (b) Breakeven point total and per product.

Question

Accepted Answer

Given:
- Fixed Costs = ₹38,000
- Classic Cheese (CC): SP = ₹15, VC = ₹9, CM = ₹6, Sales Mix = 50%
- Toasted Corn (TC): SP = ₹21, VC = ₹14, CM = ₹7, Sales Mix = 20%
- Tangy Tomato (TT): SP = ₹36, VC = ₹19, CM = ₹17, Sales Mix = 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 (Total):**
BEP (units) = Fixed Costs / Weighted CM
= 38,000 / 9.50
= **4,000 units**

Break-Even Point 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**

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**