Baked Delight Ltd. has diversified into flavoured fox nuts and popcorn. Sale price per unit: Classic salted Fox nuts Rs.120, Caramel salted Popcorn Rs.80. Variable cost per unit: Fox nuts Rs.70, Popcorn Rs.30. Sales mix percentage: Fox nuts 40%, Popcorn 60%. Fixed cost Rs.1,00,000. Calculate Break-Even Point in units and rupees.

Question

Accepted Answer

Given:
- Fixed Cost = ₹1,00,000
- Classic Salted Fox Nuts: SP = ₹120, VC = ₹70, CM = ₹50, Sales Mix = 40%
- Caramel Salted Popcorn: SP = ₹80, VC = ₹30, CM = ₹50, Sales Mix = 60%

**Step 1: Calculate Weighted Average Contribution Margin per unit**
= (CM of Fox Nuts × Sales Mix %) + (CM of Popcorn × Sales Mix %)
= (50 × 0.40) + (50 × 0.60)
= 20 + 30
= **₹50 per unit**

**Step 2: Calculate Break-Even Point in units of sales mix**
BEP (units) = Fixed Cost / Weighted Average CM
= 1,00,000 / 50
= **2,000 units**

**Step 3: Calculate Break-Even Point per product in units**
- Fox Nuts: 2,000 × 40% = **800 units**
- Popcorn: 2,000 × 60% = **1,200 units**

**Step 4: Calculate Break-Even Point in rupees**
- Fox Nuts: 800 × ₹120 = ₹96,000
- Popcorn: 1,200 × ₹80 = ₹96,000
- **Total BEP (₹) = ₹1,92,000**

Verification: Total Contribution = (800 × 50) + (1,200 × 50) = 40,000 + 60,000 = ₹1,00,000 = Fixed Cost. Hence verified.