'Royal Fruit Juice Ltd.' are the manufacturers of different types of fruit juices. They do not use any artificial flavours in their products. The fixed cost of the production process is ₹ 1,76,000. Given below is information about Mango, Orange and Guava fruit juices. Type of Juice | Mango (Per Litre) | Orange (Per Litre) | Guava (Per Litre) Selling Price (₹) | 150 | 135 | 100 Variable Cost (₹) | 80 | 65 | 60 Sales Mix Percentage | 20% | 40% | 40% From the above data, calculate the following : (a) Total weighted average contribution margin per unit. (b) Break-even point in units of sales mix. (c) Break-even point (in ₹) for each type of juice.

Question

Accepted Answer

Given:
- Fixed Cost = ₹1,76,000
- Sales Mix: Mango 20%, Orange 40%, Guava 40%
- Contribution Margins: Mango ₹70 (150−80), Orange ₹70 (135−65), Guava ₹40 (100−60)

**(a) Total Weighted Average Contribution Margin per unit:**
= (70 × 0.20) + (70 × 0.40) + (40 × 0.40)
= 14 + 28 + 16
= **₹58 per litre**

**(b) Break-Even Point in units of sales mix:**
Total BEP (units) = Fixed Cost / Weighted CM
= 1,76,000 / 58
= **3,034 litres** (rounded up)

Per product:
- Mango: 3,034 × 20% = **607 litres**
- Orange: 3,034 × 40% = **1,214 litres**
- Guava: 3,034 × 40% = **1,213 litres**

**(c) Break-Even Point in rupees for each type of juice:**
- Mango: 607 × ₹150 = **₹91,050**
- Orange: 1,214 × ₹135 = **₹1,63,890**
- Guava: 1,213 × ₹100 = **₹1,21,300**
- **Total BEP (₹) = ₹3,76,240**

Verification: Total Contribution = (607 × 70) + (1,214 × 70) + (1,213 × 40) = 42,490 + 84,980 + 48,520 = ₹1,75,990 ≈ ₹1,76,000 = Fixed Cost (difference due to rounding). Hence verified.