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Sales Mix
What happens when a company sells more than one product?
- The sales mix is the proportion of total sales that each product represents.
- For example, if 75% of Apple products sold are iPhones and 25% are iPads, then the 75% and 25% are the sales mix for the respective product.
- In order to compute things like break-even points or required sales for companies with multiple products, we must first compute the average contribution margin using the sales mix.
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Example: Sales Mix
The XYZ Co. has the following product units and mix data:
How many units of Product A have to be sold at the desired income before taxes?
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Example: Sales Mix
The XYZ Co. has the following unit and mix data:
How many units of each product must be sold to break-even?
Practice: Sales Mix
Garabedian Media produces a range of cameras used in photography. Selected information on the cameras is given below:
Fixed costs per year total $500,000 and the sales mix per unit has consistently been 40%, 50% and 10% for the Standard, Deluxe and Professional cameras respectively.
Compute the break-even point per unit of each product.
Practice: Sales Mix
Garabedian Media produces a range of cameras used in photography. Selected information on the cameras is given below:
Fixed costs per year total $500,000 and the sales mix in dollars has consistently been 30%, 40% and 30% for the Standard, Deluxe and Professional cameras respectively.
- Compute the break-even point per unit of each product.
What is the total sales revenue the company needs to break even?