AID13217: Ahmedabad Company Ltd. manufactures and sells four types of products under the brand name Ambience, Luxury, Comfort and Lavish. The sales mix in value comprises the following

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Question: Ahmedabad Company Ltd. manufactures and sells four types of products under the brand name Ambience, Luxury, Comfort and Lavish. The sales mix in value comprises the following:

Brand name

Percentage

Ambience

33 1/3

Luxury

412/3

Comfort

16 2/3

Lavish

8 1/3

 

_____

 

100

The total budgeted sales (100%) are $ 600,000 per month.

The operating costs are:

Ambience 60% of selling price Luxury

Luxury 68% of selling price Comfort

Comfort 80% of selling price Lavish

Lavish 40% of selling price

The fixed costs are $. 159,000 per month.

A) Calculate the breakeven point for the products on an overall basis.

b) It has been proposed to change the sales mix as follows, with the sales per month remaining at $. 6,00,000:

Brand Name

Percentage

Ambience

25

Luxury

40

Comfort

30

Lavish

05

 

——–

 

100

Assuming that this proposal is implemented, calculate the new breakeven point.

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