'Baked Delight Ltd.' is a well known name in breads and bakery products. It has diversified into flavoured fox nuts and popcorn. The two were introduced as smart snacking options for health and diet conscious people. To start with, both will be sold in a standard packing of 50 gm each. Fixed cost for these will be ₹ 1,00,000. Sale price and variable cost per unit is as follows : Particulars | Classic salted Fox nuts | Caramel salted Popcorn Sale price per unit (₹) | 120 | 80 Variable cost per unit (₹) | 70 | 30 Sales mix percentage (%) | 40 | 60 From the given information 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.