{"id":87,"date":"2021-01-26T22:02:55","date_gmt":"2021-01-26T22:02:55","guid":{"rendered":"https:\/\/courses.lumenlearning.com\/wm-managerialaccounting\/?post_type=chapter&#038;p=87"},"modified":"2021-06-10T19:07:09","modified_gmt":"2021-06-10T19:07:09","slug":"sales-mix","status":"publish","type":"chapter","link":"https:\/\/courses.lumenlearning.com\/suny-clinton-managerialaccounting\/chapter\/sales-mix\/","title":{"raw":"Sales Mix","rendered":"Sales Mix"},"content":{"raw":"<div class=\"textbox learning-objectives\">\r\n<h3>Learning Outcomes<\/h3>\r\n<ul>\r\n \t<li>Calculate multiple product break-even points<\/li>\r\n<\/ul>\r\n<\/div>\r\n<img class=\" wp-image-777 alignright\" src=\"https:\/\/s3-us-west-2.amazonaws.com\/courses-images\/wp-content\/uploads\/sites\/5469\/2021\/01\/17150454\/tom-hermans-9BoqXzEeQqM-unsplash-300x200.jpg\" alt=\"Multiple books on a cart.\" width=\"194\" height=\"129\" \/>To calculate the break-even point for multiple product lines, first determine the sales mix, which is the percent of overall sales each of the two products represents.\r\n\r\nLet\u2019s say that BlankBooks, Inc. is considering adding a second product--a fancier version of the plain journal. Each product will have its own unit selling price and unit variable cost, as follows:\r\n<div align=\"left\">\r\n<table class=\"fin-table acctstatement fw\">\r\n<tbody>\r\n<tr>\r\n<th class=\"r\" scope=\"col\"><\/th>\r\n<th class=\"r\" scope=\"col\">Plain<\/th>\r\n<th class=\"r\" scope=\"col\">Fancy<\/th>\r\n<\/tr>\r\n<\/tbody>\r\n<tbody>\r\n<tr>\r\n<td>Sales price per unit<\/td>\r\n<td class=\"r\">$ \u00a0 \u00a0 \u00a0 \u00a0\u00a0 10.00<\/td>\r\n<td class=\"r\">$\u00a0 \u00a0 \u00a0 \u00a0 \u00a0 14.00<\/td>\r\n<\/tr>\r\n<tr>\r\n<td>Less: Variable cost per unit<\/td>\r\n<td class=\"r\">8.30<\/td>\r\n<td class=\"r\">13.30<\/td>\r\n<\/tr>\r\n<tr>\r\n<td>= Contribution margin per unit<\/td>\r\n<td class=\"r line-single\"><span class=\"u-sr-only\">Single Line<\/span>$ \u00a0 \u00a0 \u00a0 \u00a0 \u00a0 1.70<\/td>\r\n<td class=\"r line-single\"><span class=\"u-sr-only\">Single Line<\/span>$ \u00a0 \u00a0 \u00a0 \u00a0 \u00a0 0.70<\/td>\r\n<\/tr>\r\n<\/tbody>\r\n<\/table>\r\n<\/div>\r\nTo calculate break-even, we\u2019ll use a weighted average of the two contribution margins based on the expected product mix that the sales manager and production manager have initially agreed is possible.\r\n\r\nPlain 2,320 units\r\n\r\nFancy 580 units\r\n<div align=\"left\">\r\n<table class=\"fin-table acctstatement fw\" style=\"height: 96px;\">\r\n<tbody>\r\n<tr style=\"height: 12px;\">\r\n<th class=\"r\" style=\"height: 12px; width: 216.5px;\" scope=\"col\"><\/th>\r\n<th class=\"r\" style=\"height: 12px; width: 209.5px;\" scope=\"col\">Plain<\/th>\r\n<th class=\"r\" style=\"height: 12px; width: 199.5px;\" scope=\"col\">Fancy<\/th>\r\n<th class=\"r\" style=\"height: 12px; width: 209.5px;\" scope=\"col\"><span class=\"u-sr-only\">Total<\/span><\/th>\r\n<\/tr>\r\n<\/tbody>\r\n<tbody>\r\n<tr style=\"height: 12px;\">\r\n<td style=\"height: 12px; width: 216.5px;\">Sales price per unit<\/td>\r\n<td class=\"r\" style=\"height: 12px; width: 209.5px;\">$ \u00a0 \u00a0 \u00a0\u00a0 \u00a0 10.00<\/td>\r\n<td class=\"r\" style=\"height: 12px; width: 199.5px;\">$\u00a0 \u00a0 \u00a0 \u00a0 \u00a0 14.00<\/td>\r\n<\/tr>\r\n<tr style=\"height: 12px;\">\r\n<td style=\"height: 12px; width: 216.5px;\">Less: Variable cost per unit<\/td>\r\n<td class=\"r\" style=\"height: 12px; width: 209.5px;\">8.30<\/td>\r\n<td class=\"r\" style=\"height: 12px; width: 199.5px;\">13.30<\/td>\r\n<\/tr>\r\n<tr style=\"height: 12px;\">\r\n<td style=\"height: 12px; width: 216.5px;\">= Contribution margin per unit<\/td>\r\n<td class=\"r line-single\" style=\"height: 12px; width: 209.5px;\"><span class=\"u-sr-only\">Single Line<\/span>$ \u00a0 \u00a0 \u00a0 \u00a0 \u00a0 1.70<\/td>\r\n<td class=\"r line-single\" style=\"height: 12px; width: 199.5px;\"><span class=\"u-sr-only\">Single Line<\/span>$ \u00a0 \u00a0 \u00a0 \u00a0 \u00a0 0.70<\/td>\r\n<\/tr>\r\n<tr style=\"height: 12px;\">\r\n<td style=\"height: 12px; width: 216.5px;\">X Sales mix in units<\/td>\r\n<td class=\"r\" style=\"height: 12px; width: 209.5px;\">\u00a0 \u00a0 \u00a0 \u00a0 \u00a0 \u00a0 2,320.00<\/td>\r\n<td class=\"r\" style=\"height: 12px; width: 199.5px;\">\u00a0 \u00a0 \u00a0 \u00a0 \u00a0 \u00a0 580.00<\/td>\r\n<td class=\"r\" style=\"height: 12px; width: 209.5px;\">\u00a0 \u00a0 \u00a0 \u00a0 \u00a0 2,900.00<\/td>\r\n<\/tr>\r\n<tr style=\"height: 12px;\">\r\n<td style=\"height: 12px; width: 216.5px;\">Contribution margin<\/td>\r\n<td class=\"r line-single line-double\" style=\"height: 12px; width: 209.5px;\"><span class=\"u-sr-only\">Single Line<\/span>$ \u00a0 \u00a0 \u00a0 3,944.00<span class=\"u-sr-only\">Double line<\/span><\/td>\r\n<td class=\"r line-single line-double\" style=\"height: 12px; width: 199.5px;\"><span class=\"u-sr-only\">Single Line<\/span>$ \u00a0 \u00a0 \u00a0\u00a0\u00a0\u00a0406.00<span class=\"u-sr-only\">Double line<\/span><\/td>\r\n<td class=\"r line-single line-double\" style=\"height: 12px; width: 209.5px;\"><span class=\"u-sr-only\">Single Line<\/span>$ \u00a0 \u00a0\u00a0\u00a0\u00a0 \u00a0 4,350.00<span class=\"u-sr-only\">Double line<\/span><\/td>\r\n<\/tr>\r\n<tr style=\"height: 12px;\">\r\n<td style=\"height: 12px; width: 216.5px;\">Weighted average contribution margin<\/td>\r\n<td style=\"height: 12px; width: 209.5px;\"><\/td>\r\n<td style=\"height: 12px; width: 199.5px;\"><\/td>\r\n<td class=\"r line-double\" style=\"height: 12px; width: 209.5px;\">$\u00a0 \u00a0 \u00a0 \u00a0 \u00a0 \u00a0 \u00a0 1.50<span class=\"u-sr-only\">Double line<\/span><\/td>\r\n<\/tr>\r\n<tr style=\"height: 12px;\">\r\n<td style=\"height: 12px; width: 216.5px;\"><\/td>\r\n<td style=\"height: 12px; width: 209.5px;\"><\/td>\r\n<td style=\"height: 12px; width: 199.5px;\"><\/td>\r\n<td style=\"height: 12px; width: 209.5px;\"><\/td>\r\n<\/tr>\r\n<\/tbody>\r\n<\/table>\r\n<\/div>\r\nA <strong>straight average<\/strong> of the two contribution margins would be (1.70 + 0.70) \/ 2 = 1.20, but a simple average like that doesn\u2019t take into account the fact that we are planning to sell 4 times as many plain journals as we do fancy (expressed as a ratio, it would be 4:1).\r\n\r\nA <strong>weighted average<\/strong> takes the different volumes of each product into account by first extending the contribution margins to get the total contribution margin, and then dividing that amount by the total units.\r\n\r\nThe contribution margin for plain journals will be $1.70 X 2,320 = $3,944.00.\r\n\r\nThe contribution margin for fancy journals will be $0.70 X 580 = $406.00.\r\n\r\nThe total contribution margin will be $3,944.00 + $406.00 = $4,350.\r\n\r\nDivide that by total units of 2,900 and we get a weighted average contribution margin of $1.50.\r\n\r\nTo get the break-even quantity then, we would divide total fixed costs that need to be covered by the weighted average contribution margin:\r\n<p style=\"padding-left: 30px;\">$3,400 \/ 1.50 = 2266.6666<\/p>\r\nThis is a repeating decimal that is more accurately expressed as a fraction = 2266 \u2154 units. Since we can\u2019t make \u2154 of a unit, we round up to the next highest. This is a different rounding rule than normal because even if the fraction came out to be less than half a unit, we would still round up rather than round down.\r\n\r\nFor instance, if your calculation showed that you needed 999.25 units, you would still have to make 1,000 units in order to have a slight profit instead of a slight loss. In most real cases, none of your numbers will come out exactly even the way they do in the textbook.\r\n\r\nSo, we need 2267 units in order to break-even. These units have to be split back out into plain and fancy. Our product mix is 80\/20, which is the same as 4:1:\r\n<div align=\"left\">\r\n<table class=\"fin-table acctstatement fw\">\r\n<thead>\r\n<tr class=\"u-sr-only\">\r\n<th scope=\"col\">Unit Type<\/th>\r\n<th scope=\"col\">Total Units<\/th>\r\n<th scope=\"col\">Product Mix Percentage<\/th>\r\n<th scope=\"col\">Product Type Total Units<\/th>\r\n<\/tr>\r\n<\/thead>\r\n<tbody>\r\n<tr>\r\n<td>Sales Mix<\/td>\r\n<td><\/td>\r\n<td><\/td>\r\n<td><\/td>\r\n<\/tr>\r\n<tr>\r\n<td>\u00a0\u00a0Classic<\/td>\r\n<td class=\"r\">2,267<\/td>\r\n<td class=\"r\">80.00%<\/td>\r\n<td class=\"r\">1,813.6<\/td>\r\n<\/tr>\r\n<tr>\r\n<td>\u00a0\u00a0Ultra<\/td>\r\n<td class=\"r\">2,267<\/td>\r\n<td class=\"r\">20.00%<\/td>\r\n<td class=\"r\">453.4<\/td>\r\n<\/tr>\r\n<tr>\r\n<td><\/td>\r\n<td><\/td>\r\n<td><\/td>\r\n<td class=\"r line-single line-double\"><span class=\"u-sr-only\">Single Line<\/span>2,267<span class=\"u-sr-only\">Double line<\/span><\/td>\r\n<\/tr>\r\n<tr>\r\n<td><\/td>\r\n<td><\/td>\r\n<td><\/td>\r\n<td><\/td>\r\n<\/tr>\r\n<\/tbody>\r\n<\/table>\r\n<\/div>\r\nAgain, because these are books, we can't make partial units, so we would have to round:\r\n<div align=\"left\">\r\n<table class=\"fin-table acctstatement fw\">\r\n<thead>\r\n<tr class=\"u-sr-only\">\r\n<th scope=\"col\">Unit Type<\/th>\r\n<th scope=\"col\">Total Units<\/th>\r\n<th scope=\"col\">Product Mix Percentage<\/th>\r\n<th scope=\"col\">Product Type Total Units<\/th>\r\n<\/tr>\r\n<\/thead>\r\n<tbody>\r\n<tr>\r\n<td>Sales Mix<\/td>\r\n<td><\/td>\r\n<td><\/td>\r\n<td><\/td>\r\n<\/tr>\r\n<tr>\r\n<td>\u00a0\u00a0Classic<\/td>\r\n<td class=\"r\">2,267<\/td>\r\n<td class=\"r\">80.00%<\/td>\r\n<td class=\"r\">1,814<\/td>\r\n<\/tr>\r\n<tr>\r\n<td>\u00a0\u00a0Ultra<\/td>\r\n<td class=\"r\">2,267<\/td>\r\n<td class=\"r\">20.00%<\/td>\r\n<td class=\"r\">453<\/td>\r\n<\/tr>\r\n<tr>\r\n<td><\/td>\r\n<td><\/td>\r\n<td><\/td>\r\n<td class=\"r line-single line-double\"><span class=\"u-sr-only\">Single Line<\/span>2,267<span class=\"u-sr-only\">Double line<\/span><\/td>\r\n<\/tr>\r\n<tr>\r\n<td><\/td>\r\n<td><\/td>\r\n<td><\/td>\r\n<td><\/td>\r\n<\/tr>\r\n<\/tbody>\r\n<\/table>\r\n<\/div>\r\nNow let\u2019s see how sound our calculation is by plugging this sales mix into our contribution margin model:\r\n<div align=\"left\">\r\n<table class=\"fin-table acctstatement fw\"><caption>BlankBooks, Inc.\r\nSales Mix - break-even point\r\nFor the month ending July 31, 20XX<\/caption>\r\n<tbody>\r\n<tr>\r\n<th class=\"r\" scope=\"col\"><\/th>\r\n<th class=\"r\" scope=\"col\">Units<\/th>\r\n<th class=\"r\" scope=\"col\">$\/Unit<\/th>\r\n<th class=\"r\" scope=\"col\">Total<\/th>\r\n<\/tr>\r\n<\/tbody>\r\n<tbody>\r\n<tr>\r\n<td colspan=\"3\"><span class=\"u-sr-only\">Subcategory, <\/span><strong>Sales<\/strong><\/td>\r\n<\/tr>\r\n<tr>\r\n<td>\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0Plain<\/td>\r\n<td class=\"r\">1,814<\/td>\r\n<td class=\"r\">$10.00<\/td>\r\n<td class=\"r\">$ \u00a0 \u00a0 18,140.00<\/td>\r\n<\/tr>\r\n<tr>\r\n<td>\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0Fancy<\/td>\r\n<td class=\"r\">454<\/td>\r\n<td class=\"r\">$14.00<\/td>\r\n<td class=\"r\">$ \u00a0 \u00a0 \u00a06,356.00<\/td>\r\n<\/tr>\r\n<tr>\r\n<td>\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0Total sales<\/td>\r\n<td><\/td>\r\n<td><\/td>\r\n<td class=\"r line-single\"><span class=\"u-sr-only\">Single Line<\/span>$ \u00a0 \u00a0 24,496.00<\/td>\r\n<\/tr>\r\n<tr>\r\n<td colspan=\"3\"><span class=\"u-sr-only\">Subcategory, <\/span><strong>Variable costs<\/strong><\/td>\r\n<td class=\"r line-single\"><span class=\"u-sr-only\">Single Line<\/span><\/td>\r\n<\/tr>\r\n<tr>\r\n<td>\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0Plain<\/td>\r\n<td class=\"r\">1,814<\/td>\r\n<td class=\"r\">$8.30<\/td>\r\n<td class=\"r\">$ \u00a0 \u00a0 15,056.20<\/td>\r\n<\/tr>\r\n<tr>\r\n<td>\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0Fancy<\/td>\r\n<td class=\"r\">454<\/td>\r\n<td class=\"r\">$13.30<\/td>\r\n<td class=\"r\">$ \u00a0 \u00a0 \u00a06,038.20<\/td>\r\n<\/tr>\r\n<tr>\r\n<td>\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0Total variable costs<\/td>\r\n<td><\/td>\r\n<td><\/td>\r\n<td class=\"r line-single\"><span class=\"u-sr-only\">Single Line<\/span>$ \u00a0 \u00a0 21,094.40<\/td>\r\n<\/tr>\r\n<tr>\r\n<td>Contribution Margin<\/td>\r\n<td><\/td>\r\n<td><\/td>\r\n<td class=\"r line-single\"><span class=\"u-sr-only\">Single Line<\/span>$ \u00a0 \u00a0\u00a0 3,401.60<\/td>\r\n<\/tr>\r\n<tr>\r\n<td>Fixed costs<\/td>\r\n<td><\/td>\r\n<td><\/td>\r\n<td class=\"r\">$ \u00a0 \u00a0 \u00a03,400.00<\/td>\r\n<\/tr>\r\n<tr>\r\n<td>Operating income<\/td>\r\n<td><\/td>\r\n<td><\/td>\r\n<td class=\"r line-single line-double\"><span class=\"u-sr-only\">Single Line<\/span>$\u00a0 \u00a0 \u00a0 \u00a0 \u00a0 1.60<span class=\"u-sr-only\">Double line<\/span><\/td>\r\n<\/tr>\r\n<tr>\r\n<td><\/td>\r\n<td><\/td>\r\n<td><\/td>\r\n<td><\/td>\r\n<\/tr>\r\n<tr>\r\n<td><\/td>\r\n<td><\/td>\r\n<td><\/td>\r\n<td><\/td>\r\n<\/tr>\r\n<\/tbody>\r\n<\/table>\r\n<\/div>\r\nThe bottom line is not exactly zero because we rounded the number of units.\r\n\r\nTo calculate for a target profit, simply add the target profit to fixed costs and run the same calculations.\r\n\r\nFor instance, to get a target profit of $5,000 per month, fixed costs + target profit would be $8,400, and the total units needed would be:\r\n<p style=\"padding-left: 30px;\">$8,400 \/ 1.5 = 5,600 units<\/p>\r\nThese units have to be split back out into plain and fancy. Our product mix is 80\/20:\r\n<div align=\"left\">\r\n<table class=\"fin-table acctstatement fw\">\r\n<thead>\r\n<tr class=\"u-sr-only\">\r\n<th scope=\"col\">Unit Type<\/th>\r\n<th scope=\"col\">Total Units<\/th>\r\n<th scope=\"col\">Product Mix Percentage<\/th>\r\n<th scope=\"col\">Product Type Total Units<\/th>\r\n<\/tr>\r\n<\/thead>\r\n<tbody>\r\n<tr>\r\n<td>Sales Mix<\/td>\r\n<td><\/td>\r\n<td><\/td>\r\n<td><\/td>\r\n<\/tr>\r\n<tr>\r\n<td>\u00a0\u00a0Classic<\/td>\r\n<td class=\"r\">5,600<\/td>\r\n<td class=\"r\">80.00%<\/td>\r\n<td class=\"r\">4,480<\/td>\r\n<\/tr>\r\n<tr>\r\n<td>\u00a0\u00a0Ultra<\/td>\r\n<td class=\"r\">5,600<\/td>\r\n<td class=\"r\">20.00%<\/td>\r\n<td class=\"r\">1,120<\/td>\r\n<\/tr>\r\n<tr>\r\n<td><\/td>\r\n<td><\/td>\r\n<td><\/td>\r\n<td class=\"r line-single line-double\"><span class=\"u-sr-only\">Single Line<\/span>5,600<span class=\"u-sr-only\">Double line<\/span><\/td>\r\n<\/tr>\r\n<tr>\r\n<td><\/td>\r\n<td><\/td>\r\n<td><\/td>\r\n<td><\/td>\r\n<\/tr>\r\n<\/tbody>\r\n<\/table>\r\n<\/div>\r\nAnd our contribution margin statement looks like this:\r\n<div align=\"left\">\r\n<table class=\"fin-table acctstatement fw\"><caption>BlankBooks, Inc.\r\nSales Mix - target profit\r\nFor the month ending July 31, 20XX<\/caption>\r\n<tbody>\r\n<tr>\r\n<th class=\"r\" scope=\"col\"><\/th>\r\n<th class=\"r\" scope=\"col\">Units<\/th>\r\n<th class=\"r\" scope=\"col\">$\/Unit<\/th>\r\n<th class=\"r\" scope=\"col\">Total<\/th>\r\n<\/tr>\r\n<\/tbody>\r\n<tbody>\r\n<tr>\r\n<td colspan=\"3\"><span class=\"u-sr-only\">Subcategory, <\/span><strong>Sales<\/strong><\/td>\r\n<\/tr>\r\n<tr>\r\n<td>\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0Plain<\/td>\r\n<td class=\"r\">4,480<\/td>\r\n<td class=\"r\">$10.00<\/td>\r\n<td class=\"r\">$ \u00a0 \u00a0 44,800.00<\/td>\r\n<\/tr>\r\n<tr>\r\n<td>\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0Fancy<\/td>\r\n<td class=\"r\">1,120<\/td>\r\n<td class=\"r\">$14.00<\/td>\r\n<td class=\"r\">$ \u00a0 \u00a0\u00a015,680.00<\/td>\r\n<\/tr>\r\n<tr>\r\n<td>\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0Total sales<\/td>\r\n<td><\/td>\r\n<td><\/td>\r\n<td class=\"r line-single\"><span class=\"u-sr-only\">Single Line<\/span>$ \u00a0 \u00a0 60,840.00<\/td>\r\n<\/tr>\r\n<tr>\r\n<td colspan=\"3\"><span class=\"u-sr-only\">Subcategory, <\/span><strong>Variable costs<\/strong><\/td>\r\n<td class=\"r line-single\"><span class=\"u-sr-only\">Single Line<\/span><\/td>\r\n<\/tr>\r\n<tr>\r\n<td>\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0Plain<\/td>\r\n<td class=\"r\">4,480<\/td>\r\n<td class=\"r\">$8.30<\/td>\r\n<td class=\"r\">$ \u00a0 \u00a0 37,184.00<\/td>\r\n<\/tr>\r\n<tr>\r\n<td>\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0Fancy<\/td>\r\n<td class=\"r\">1,120<\/td>\r\n<td class=\"r\">$13.30<\/td>\r\n<td class=\"r\">$ \u00a0 \u00a0 14,896.00<\/td>\r\n<\/tr>\r\n<tr>\r\n<td>\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0Total variable costs<\/td>\r\n<td><\/td>\r\n<td><\/td>\r\n<td class=\"r line-single\"><span class=\"u-sr-only\">Single Line<\/span>$ \u00a0 \u00a0 52,080.00<\/td>\r\n<\/tr>\r\n<tr>\r\n<td>Contribution Margin<\/td>\r\n<td><\/td>\r\n<td><\/td>\r\n<td class=\"r line-single\"><span class=\"u-sr-only\">Single Line<\/span>$ \u00a0 \u00a0\u00a0 8,400.00<\/td>\r\n<\/tr>\r\n<tr>\r\n<td>Fixed costs<\/td>\r\n<td><\/td>\r\n<td><\/td>\r\n<td class=\"r\">$ \u00a0\u00a0 \u00a0 3,400.00<\/td>\r\n<\/tr>\r\n<tr>\r\n<td>Operating income<\/td>\r\n<td><\/td>\r\n<td><\/td>\r\n<td class=\"r line-single line-double\"><span class=\"u-sr-only\">Single Line<\/span>$\u00a0 \u00a0 \u00a0 \u00a05000.00<span class=\"u-sr-only\">Double line<\/span><\/td>\r\n<\/tr>\r\n<tr>\r\n<td><\/td>\r\n<td><\/td>\r\n<td><\/td>\r\n<td><\/td>\r\n<\/tr>\r\n<tr>\r\n<td><\/td>\r\n<td><\/td>\r\n<td><\/td>\r\n<td><\/td>\r\n<\/tr>\r\n<\/tbody>\r\n<\/table>\r\n<\/div>\r\nAs you can see, once you have the model, especially once you have created it in a spreadsheet or other software program, you can expand it and use it for an incredible array of \u201cwhat-if\u201d analysis.\r\n\r\nHere is a bit more involved example of calculating the break-even point for multiple product lives:\r\n\r\n<iframe src=\"\/\/plugin.3playmedia.com\/show?mf=6352534&amp;p3sdk_version=1.10.1&amp;p=20361&amp;pt=375&amp;video_id=QsNAp26mFPI&amp;video_target=tpm-plugin-0m3kbboh-QsNAp26mFPI\" width=\"800px\" height=\"450px\" frameborder=\"0\" marginwidth=\"0px\" marginheight=\"0px\"><\/iframe>\r\n\r\nYou can view the <a href=\"https:\/\/oerfiles.s3.us-west-2.amazonaws.com\/Managerial+Accounting\/Transcripts\/acct2102LoftyIncMultiProduct_transcript.txt\" target=\"_blank\" rel=\"noopener\">transcript for \"acct 2102 Lofty Inc multi product break even CLASS ACTIVITY\" here (opens in new window)<\/a>.\r\n\r\nNow, let\u2019s check your understanding of using the CVP model with multiple product lines.\r\n<div class=\"textbox tryit\">\r\n<h3>Practice Question<\/h3>\r\n[ohm_question hide_question_numbers=1]217768[\/ohm_question]\r\n\r\n<\/div>","rendered":"<div class=\"textbox learning-objectives\">\n<h3>Learning Outcomes<\/h3>\n<ul>\n<li>Calculate multiple product break-even points<\/li>\n<\/ul>\n<\/div>\n<p><img loading=\"lazy\" decoding=\"async\" class=\"wp-image-777 alignright\" src=\"https:\/\/s3-us-west-2.amazonaws.com\/courses-images\/wp-content\/uploads\/sites\/5469\/2021\/01\/17150454\/tom-hermans-9BoqXzEeQqM-unsplash-300x200.jpg\" alt=\"Multiple books on a cart.\" width=\"194\" height=\"129\" \/>To calculate the break-even point for multiple product lines, first determine the sales mix, which is the percent of overall sales each of the two products represents.<\/p>\n<p>Let\u2019s say that BlankBooks, Inc. is considering adding a second product&#8211;a fancier version of the plain journal. Each product will have its own unit selling price and unit variable cost, as follows:<\/p>\n<div style=\"text-align: left;\">\n<table class=\"fin-table acctstatement fw\">\n<tbody>\n<tr>\n<th class=\"r\" scope=\"col\"><\/th>\n<th class=\"r\" scope=\"col\">Plain<\/th>\n<th class=\"r\" scope=\"col\">Fancy<\/th>\n<\/tr>\n<\/tbody>\n<tbody>\n<tr>\n<td>Sales price per unit<\/td>\n<td class=\"r\">$ \u00a0 \u00a0 \u00a0 \u00a0\u00a0 10.00<\/td>\n<td class=\"r\">$\u00a0 \u00a0 \u00a0 \u00a0 \u00a0 14.00<\/td>\n<\/tr>\n<tr>\n<td>Less: Variable cost per unit<\/td>\n<td class=\"r\">8.30<\/td>\n<td class=\"r\">13.30<\/td>\n<\/tr>\n<tr>\n<td>= Contribution margin per unit<\/td>\n<td class=\"r line-single\"><span class=\"u-sr-only\">Single Line<\/span>$ \u00a0 \u00a0 \u00a0 \u00a0 \u00a0 1.70<\/td>\n<td class=\"r line-single\"><span class=\"u-sr-only\">Single Line<\/span>$ \u00a0 \u00a0 \u00a0 \u00a0 \u00a0 0.70<\/td>\n<\/tr>\n<\/tbody>\n<\/table>\n<\/div>\n<p>To calculate break-even, we\u2019ll use a weighted average of the two contribution margins based on the expected product mix that the sales manager and production manager have initially agreed is possible.<\/p>\n<p>Plain 2,320 units<\/p>\n<p>Fancy 580 units<\/p>\n<div style=\"text-align: left;\">\n<table class=\"fin-table acctstatement fw\" style=\"height: 96px;\">\n<tbody>\n<tr style=\"height: 12px;\">\n<th class=\"r\" style=\"height: 12px; width: 216.5px;\" scope=\"col\"><\/th>\n<th class=\"r\" style=\"height: 12px; width: 209.5px;\" scope=\"col\">Plain<\/th>\n<th class=\"r\" style=\"height: 12px; width: 199.5px;\" scope=\"col\">Fancy<\/th>\n<th class=\"r\" style=\"height: 12px; width: 209.5px;\" scope=\"col\"><span class=\"u-sr-only\">Total<\/span><\/th>\n<\/tr>\n<\/tbody>\n<tbody>\n<tr style=\"height: 12px;\">\n<td style=\"height: 12px; width: 216.5px;\">Sales price per unit<\/td>\n<td class=\"r\" style=\"height: 12px; width: 209.5px;\">$ \u00a0 \u00a0 \u00a0\u00a0 \u00a0 10.00<\/td>\n<td class=\"r\" style=\"height: 12px; width: 199.5px;\">$\u00a0 \u00a0 \u00a0 \u00a0 \u00a0 14.00<\/td>\n<\/tr>\n<tr style=\"height: 12px;\">\n<td style=\"height: 12px; width: 216.5px;\">Less: Variable cost per unit<\/td>\n<td class=\"r\" style=\"height: 12px; width: 209.5px;\">8.30<\/td>\n<td class=\"r\" style=\"height: 12px; width: 199.5px;\">13.30<\/td>\n<\/tr>\n<tr style=\"height: 12px;\">\n<td style=\"height: 12px; width: 216.5px;\">= Contribution margin per unit<\/td>\n<td class=\"r line-single\" style=\"height: 12px; width: 209.5px;\"><span class=\"u-sr-only\">Single Line<\/span>$ \u00a0 \u00a0 \u00a0 \u00a0 \u00a0 1.70<\/td>\n<td class=\"r line-single\" style=\"height: 12px; width: 199.5px;\"><span class=\"u-sr-only\">Single Line<\/span>$ \u00a0 \u00a0 \u00a0 \u00a0 \u00a0 0.70<\/td>\n<\/tr>\n<tr style=\"height: 12px;\">\n<td style=\"height: 12px; width: 216.5px;\">X Sales mix in units<\/td>\n<td class=\"r\" style=\"height: 12px; width: 209.5px;\">\u00a0 \u00a0 \u00a0 \u00a0 \u00a0 \u00a0 2,320.00<\/td>\n<td class=\"r\" style=\"height: 12px; width: 199.5px;\">\u00a0 \u00a0 \u00a0 \u00a0 \u00a0 \u00a0 580.00<\/td>\n<td class=\"r\" style=\"height: 12px; width: 209.5px;\">\u00a0 \u00a0 \u00a0 \u00a0 \u00a0 2,900.00<\/td>\n<\/tr>\n<tr style=\"height: 12px;\">\n<td style=\"height: 12px; width: 216.5px;\">Contribution margin<\/td>\n<td class=\"r line-single line-double\" style=\"height: 12px; width: 209.5px;\"><span class=\"u-sr-only\">Single Line<\/span>$ \u00a0 \u00a0 \u00a0 3,944.00<span class=\"u-sr-only\">Double line<\/span><\/td>\n<td class=\"r line-single line-double\" style=\"height: 12px; width: 199.5px;\"><span class=\"u-sr-only\">Single Line<\/span>$ \u00a0 \u00a0 \u00a0\u00a0\u00a0\u00a0406.00<span class=\"u-sr-only\">Double line<\/span><\/td>\n<td class=\"r line-single line-double\" style=\"height: 12px; width: 209.5px;\"><span class=\"u-sr-only\">Single Line<\/span>$ \u00a0 \u00a0\u00a0\u00a0\u00a0 \u00a0 4,350.00<span class=\"u-sr-only\">Double line<\/span><\/td>\n<\/tr>\n<tr style=\"height: 12px;\">\n<td style=\"height: 12px; width: 216.5px;\">Weighted average contribution margin<\/td>\n<td style=\"height: 12px; width: 209.5px;\"><\/td>\n<td style=\"height: 12px; width: 199.5px;\"><\/td>\n<td class=\"r line-double\" style=\"height: 12px; width: 209.5px;\">$\u00a0 \u00a0 \u00a0 \u00a0 \u00a0 \u00a0 \u00a0 1.50<span class=\"u-sr-only\">Double line<\/span><\/td>\n<\/tr>\n<tr style=\"height: 12px;\">\n<td style=\"height: 12px; width: 216.5px;\"><\/td>\n<td style=\"height: 12px; width: 209.5px;\"><\/td>\n<td style=\"height: 12px; width: 199.5px;\"><\/td>\n<td style=\"height: 12px; width: 209.5px;\"><\/td>\n<\/tr>\n<\/tbody>\n<\/table>\n<\/div>\n<p>A <strong>straight average<\/strong> of the two contribution margins would be (1.70 + 0.70) \/ 2 = 1.20, but a simple average like that doesn\u2019t take into account the fact that we are planning to sell 4 times as many plain journals as we do fancy (expressed as a ratio, it would be 4:1).<\/p>\n<p>A <strong>weighted average<\/strong> takes the different volumes of each product into account by first extending the contribution margins to get the total contribution margin, and then dividing that amount by the total units.<\/p>\n<p>The contribution margin for plain journals will be $1.70 X 2,320 = $3,944.00.<\/p>\n<p>The contribution margin for fancy journals will be $0.70 X 580 = $406.00.<\/p>\n<p>The total contribution margin will be $3,944.00 + $406.00 = $4,350.<\/p>\n<p>Divide that by total units of 2,900 and we get a weighted average contribution margin of $1.50.<\/p>\n<p>To get the break-even quantity then, we would divide total fixed costs that need to be covered by the weighted average contribution margin:<\/p>\n<p style=\"padding-left: 30px;\">$3,400 \/ 1.50 = 2266.6666<\/p>\n<p>This is a repeating decimal that is more accurately expressed as a fraction = 2266 \u2154 units. Since we can\u2019t make \u2154 of a unit, we round up to the next highest. This is a different rounding rule than normal because even if the fraction came out to be less than half a unit, we would still round up rather than round down.<\/p>\n<p>For instance, if your calculation showed that you needed 999.25 units, you would still have to make 1,000 units in order to have a slight profit instead of a slight loss. In most real cases, none of your numbers will come out exactly even the way they do in the textbook.<\/p>\n<p>So, we need 2267 units in order to break-even. These units have to be split back out into plain and fancy. Our product mix is 80\/20, which is the same as 4:1:<\/p>\n<div style=\"text-align: left;\">\n<table class=\"fin-table acctstatement fw\">\n<thead>\n<tr class=\"u-sr-only\">\n<th scope=\"col\">Unit Type<\/th>\n<th scope=\"col\">Total Units<\/th>\n<th scope=\"col\">Product Mix Percentage<\/th>\n<th scope=\"col\">Product Type Total Units<\/th>\n<\/tr>\n<\/thead>\n<tbody>\n<tr>\n<td>Sales Mix<\/td>\n<td><\/td>\n<td><\/td>\n<td><\/td>\n<\/tr>\n<tr>\n<td>\u00a0\u00a0Classic<\/td>\n<td class=\"r\">2,267<\/td>\n<td class=\"r\">80.00%<\/td>\n<td class=\"r\">1,813.6<\/td>\n<\/tr>\n<tr>\n<td>\u00a0\u00a0Ultra<\/td>\n<td class=\"r\">2,267<\/td>\n<td class=\"r\">20.00%<\/td>\n<td class=\"r\">453.4<\/td>\n<\/tr>\n<tr>\n<td><\/td>\n<td><\/td>\n<td><\/td>\n<td class=\"r line-single line-double\"><span class=\"u-sr-only\">Single Line<\/span>2,267<span class=\"u-sr-only\">Double line<\/span><\/td>\n<\/tr>\n<tr>\n<td><\/td>\n<td><\/td>\n<td><\/td>\n<td><\/td>\n<\/tr>\n<\/tbody>\n<\/table>\n<\/div>\n<p>Again, because these are books, we can&#8217;t make partial units, so we would have to round:<\/p>\n<div style=\"text-align: left;\">\n<table class=\"fin-table acctstatement fw\">\n<thead>\n<tr class=\"u-sr-only\">\n<th scope=\"col\">Unit Type<\/th>\n<th scope=\"col\">Total Units<\/th>\n<th scope=\"col\">Product Mix Percentage<\/th>\n<th scope=\"col\">Product Type Total Units<\/th>\n<\/tr>\n<\/thead>\n<tbody>\n<tr>\n<td>Sales Mix<\/td>\n<td><\/td>\n<td><\/td>\n<td><\/td>\n<\/tr>\n<tr>\n<td>\u00a0\u00a0Classic<\/td>\n<td class=\"r\">2,267<\/td>\n<td class=\"r\">80.00%<\/td>\n<td class=\"r\">1,814<\/td>\n<\/tr>\n<tr>\n<td>\u00a0\u00a0Ultra<\/td>\n<td class=\"r\">2,267<\/td>\n<td class=\"r\">20.00%<\/td>\n<td class=\"r\">453<\/td>\n<\/tr>\n<tr>\n<td><\/td>\n<td><\/td>\n<td><\/td>\n<td class=\"r line-single line-double\"><span class=\"u-sr-only\">Single Line<\/span>2,267<span class=\"u-sr-only\">Double line<\/span><\/td>\n<\/tr>\n<tr>\n<td><\/td>\n<td><\/td>\n<td><\/td>\n<td><\/td>\n<\/tr>\n<\/tbody>\n<\/table>\n<\/div>\n<p>Now let\u2019s see how sound our calculation is by plugging this sales mix into our contribution margin model:<\/p>\n<div style=\"text-align: left;\">\n<table class=\"fin-table acctstatement fw\">\n<caption>BlankBooks, Inc.<br \/>\nSales Mix &#8211; break-even point<br \/>\nFor the month ending July 31, 20XX<\/caption>\n<tbody>\n<tr>\n<th class=\"r\" scope=\"col\"><\/th>\n<th class=\"r\" scope=\"col\">Units<\/th>\n<th class=\"r\" scope=\"col\">$\/Unit<\/th>\n<th class=\"r\" scope=\"col\">Total<\/th>\n<\/tr>\n<\/tbody>\n<tbody>\n<tr>\n<td colspan=\"3\"><span class=\"u-sr-only\">Subcategory, <\/span><strong>Sales<\/strong><\/td>\n<\/tr>\n<tr>\n<td>\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0Plain<\/td>\n<td class=\"r\">1,814<\/td>\n<td class=\"r\">$10.00<\/td>\n<td class=\"r\">$ \u00a0 \u00a0 18,140.00<\/td>\n<\/tr>\n<tr>\n<td>\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0Fancy<\/td>\n<td class=\"r\">454<\/td>\n<td class=\"r\">$14.00<\/td>\n<td class=\"r\">$ \u00a0 \u00a0 \u00a06,356.00<\/td>\n<\/tr>\n<tr>\n<td>\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0Total sales<\/td>\n<td><\/td>\n<td><\/td>\n<td class=\"r line-single\"><span class=\"u-sr-only\">Single Line<\/span>$ \u00a0 \u00a0 24,496.00<\/td>\n<\/tr>\n<tr>\n<td colspan=\"3\"><span class=\"u-sr-only\">Subcategory, <\/span><strong>Variable costs<\/strong><\/td>\n<td class=\"r line-single\"><span class=\"u-sr-only\">Single Line<\/span><\/td>\n<\/tr>\n<tr>\n<td>\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0Plain<\/td>\n<td class=\"r\">1,814<\/td>\n<td class=\"r\">$8.30<\/td>\n<td class=\"r\">$ \u00a0 \u00a0 15,056.20<\/td>\n<\/tr>\n<tr>\n<td>\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0Fancy<\/td>\n<td class=\"r\">454<\/td>\n<td class=\"r\">$13.30<\/td>\n<td class=\"r\">$ \u00a0 \u00a0 \u00a06,038.20<\/td>\n<\/tr>\n<tr>\n<td>\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0Total variable costs<\/td>\n<td><\/td>\n<td><\/td>\n<td class=\"r line-single\"><span class=\"u-sr-only\">Single Line<\/span>$ \u00a0 \u00a0 21,094.40<\/td>\n<\/tr>\n<tr>\n<td>Contribution Margin<\/td>\n<td><\/td>\n<td><\/td>\n<td class=\"r line-single\"><span class=\"u-sr-only\">Single Line<\/span>$ \u00a0 \u00a0\u00a0 3,401.60<\/td>\n<\/tr>\n<tr>\n<td>Fixed costs<\/td>\n<td><\/td>\n<td><\/td>\n<td class=\"r\">$ \u00a0 \u00a0 \u00a03,400.00<\/td>\n<\/tr>\n<tr>\n<td>Operating income<\/td>\n<td><\/td>\n<td><\/td>\n<td class=\"r line-single line-double\"><span class=\"u-sr-only\">Single Line<\/span>$\u00a0 \u00a0 \u00a0 \u00a0 \u00a0 1.60<span class=\"u-sr-only\">Double line<\/span><\/td>\n<\/tr>\n<tr>\n<td><\/td>\n<td><\/td>\n<td><\/td>\n<td><\/td>\n<\/tr>\n<tr>\n<td><\/td>\n<td><\/td>\n<td><\/td>\n<td><\/td>\n<\/tr>\n<\/tbody>\n<\/table>\n<\/div>\n<p>The bottom line is not exactly zero because we rounded the number of units.<\/p>\n<p>To calculate for a target profit, simply add the target profit to fixed costs and run the same calculations.<\/p>\n<p>For instance, to get a target profit of $5,000 per month, fixed costs + target profit would be $8,400, and the total units needed would be:<\/p>\n<p style=\"padding-left: 30px;\">$8,400 \/ 1.5 = 5,600 units<\/p>\n<p>These units have to be split back out into plain and fancy. Our product mix is 80\/20:<\/p>\n<div style=\"text-align: left;\">\n<table class=\"fin-table acctstatement fw\">\n<thead>\n<tr class=\"u-sr-only\">\n<th scope=\"col\">Unit Type<\/th>\n<th scope=\"col\">Total Units<\/th>\n<th scope=\"col\">Product Mix Percentage<\/th>\n<th scope=\"col\">Product Type Total Units<\/th>\n<\/tr>\n<\/thead>\n<tbody>\n<tr>\n<td>Sales Mix<\/td>\n<td><\/td>\n<td><\/td>\n<td><\/td>\n<\/tr>\n<tr>\n<td>\u00a0\u00a0Classic<\/td>\n<td class=\"r\">5,600<\/td>\n<td class=\"r\">80.00%<\/td>\n<td class=\"r\">4,480<\/td>\n<\/tr>\n<tr>\n<td>\u00a0\u00a0Ultra<\/td>\n<td class=\"r\">5,600<\/td>\n<td class=\"r\">20.00%<\/td>\n<td class=\"r\">1,120<\/td>\n<\/tr>\n<tr>\n<td><\/td>\n<td><\/td>\n<td><\/td>\n<td class=\"r line-single line-double\"><span class=\"u-sr-only\">Single Line<\/span>5,600<span class=\"u-sr-only\">Double line<\/span><\/td>\n<\/tr>\n<tr>\n<td><\/td>\n<td><\/td>\n<td><\/td>\n<td><\/td>\n<\/tr>\n<\/tbody>\n<\/table>\n<\/div>\n<p>And our contribution margin statement looks like this:<\/p>\n<div style=\"text-align: left;\">\n<table class=\"fin-table acctstatement fw\">\n<caption>BlankBooks, Inc.<br \/>\nSales Mix &#8211; target profit<br \/>\nFor the month ending July 31, 20XX<\/caption>\n<tbody>\n<tr>\n<th class=\"r\" scope=\"col\"><\/th>\n<th class=\"r\" scope=\"col\">Units<\/th>\n<th class=\"r\" scope=\"col\">$\/Unit<\/th>\n<th class=\"r\" scope=\"col\">Total<\/th>\n<\/tr>\n<\/tbody>\n<tbody>\n<tr>\n<td colspan=\"3\"><span class=\"u-sr-only\">Subcategory, <\/span><strong>Sales<\/strong><\/td>\n<\/tr>\n<tr>\n<td>\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0Plain<\/td>\n<td class=\"r\">4,480<\/td>\n<td class=\"r\">$10.00<\/td>\n<td class=\"r\">$ \u00a0 \u00a0 44,800.00<\/td>\n<\/tr>\n<tr>\n<td>\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0Fancy<\/td>\n<td class=\"r\">1,120<\/td>\n<td class=\"r\">$14.00<\/td>\n<td class=\"r\">$ \u00a0 \u00a0\u00a015,680.00<\/td>\n<\/tr>\n<tr>\n<td>\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0Total sales<\/td>\n<td><\/td>\n<td><\/td>\n<td class=\"r line-single\"><span class=\"u-sr-only\">Single Line<\/span>$ \u00a0 \u00a0 60,840.00<\/td>\n<\/tr>\n<tr>\n<td colspan=\"3\"><span class=\"u-sr-only\">Subcategory, <\/span><strong>Variable costs<\/strong><\/td>\n<td class=\"r line-single\"><span class=\"u-sr-only\">Single Line<\/span><\/td>\n<\/tr>\n<tr>\n<td>\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0Plain<\/td>\n<td class=\"r\">4,480<\/td>\n<td class=\"r\">$8.30<\/td>\n<td class=\"r\">$ \u00a0 \u00a0 37,184.00<\/td>\n<\/tr>\n<tr>\n<td>\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0Fancy<\/td>\n<td class=\"r\">1,120<\/td>\n<td class=\"r\">$13.30<\/td>\n<td class=\"r\">$ \u00a0 \u00a0 14,896.00<\/td>\n<\/tr>\n<tr>\n<td>\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0Total variable costs<\/td>\n<td><\/td>\n<td><\/td>\n<td class=\"r line-single\"><span class=\"u-sr-only\">Single Line<\/span>$ \u00a0 \u00a0 52,080.00<\/td>\n<\/tr>\n<tr>\n<td>Contribution Margin<\/td>\n<td><\/td>\n<td><\/td>\n<td class=\"r line-single\"><span class=\"u-sr-only\">Single Line<\/span>$ \u00a0 \u00a0\u00a0 8,400.00<\/td>\n<\/tr>\n<tr>\n<td>Fixed costs<\/td>\n<td><\/td>\n<td><\/td>\n<td class=\"r\">$ \u00a0\u00a0 \u00a0 3,400.00<\/td>\n<\/tr>\n<tr>\n<td>Operating income<\/td>\n<td><\/td>\n<td><\/td>\n<td class=\"r line-single line-double\"><span class=\"u-sr-only\">Single Line<\/span>$\u00a0 \u00a0 \u00a0 \u00a05000.00<span class=\"u-sr-only\">Double line<\/span><\/td>\n<\/tr>\n<tr>\n<td><\/td>\n<td><\/td>\n<td><\/td>\n<td><\/td>\n<\/tr>\n<tr>\n<td><\/td>\n<td><\/td>\n<td><\/td>\n<td><\/td>\n<\/tr>\n<\/tbody>\n<\/table>\n<\/div>\n<p>As you can see, once you have the model, especially once you have created it in a spreadsheet or other software program, you can expand it and use it for an incredible array of \u201cwhat-if\u201d analysis.<\/p>\n<p>Here is a bit more involved example of calculating the break-even point for multiple product lives:<\/p>\n<p><iframe loading=\"lazy\" src=\"\/\/plugin.3playmedia.com\/show?mf=6352534&amp;p3sdk_version=1.10.1&amp;p=20361&amp;pt=375&amp;video_id=QsNAp26mFPI&amp;video_target=tpm-plugin-0m3kbboh-QsNAp26mFPI\" width=\"800px\" height=\"450px\" frameborder=\"0\" marginwidth=\"0px\" marginheight=\"0px\"><\/iframe><\/p>\n<p>You can view the <a href=\"https:\/\/oerfiles.s3.us-west-2.amazonaws.com\/Managerial+Accounting\/Transcripts\/acct2102LoftyIncMultiProduct_transcript.txt\" target=\"_blank\" rel=\"noopener\">transcript for &#8220;acct 2102 Lofty Inc multi product break even CLASS ACTIVITY&#8221; here (opens in new window)<\/a>.<\/p>\n<p>Now, let\u2019s check your understanding of using the CVP model with multiple product lines.<\/p>\n<div class=\"textbox tryit\">\n<h3>Practice Question<\/h3>\n<p><iframe loading=\"lazy\" id=\"ohm217768\" class=\"resizable\" src=\"https:\/\/ohm.lumenlearning.com\/multiembedq.php?id=217768&theme=oea&iframe_resize_id=ohm217768\" width=\"100%\" height=\"150\"><\/iframe><\/p>\n<\/div>\n\n\t\t\t <section class=\"citations-section\" role=\"contentinfo\">\n\t\t\t <h3>Candela Citations<\/h3>\n\t\t\t\t\t <div>\n\t\t\t\t\t\t <div id=\"citation-list-87\">\n\t\t\t\t\t\t\t <div class=\"licensing\"><div class=\"license-attribution-dropdown-subheading\">CC licensed content, Original<\/div><ul class=\"citation-list\"><li>Sales Mix. <strong>Authored by<\/strong>: Joseph Cooke. <strong>Provided by<\/strong>: Lumen Learning. <strong>License<\/strong>: <em><a target=\"_blank\" rel=\"license\" href=\"https:\/\/creativecommons.org\/licenses\/by\/4.0\/\">CC BY: Attribution<\/a><\/em><\/li><\/ul><div class=\"license-attribution-dropdown-subheading\">CC licensed content, Shared previously<\/div><ul class=\"citation-list\"><li>Multiple books on a cart. <strong>Authored by<\/strong>: Tom Hermans. <strong>Provided by<\/strong>: Unsplash. <strong>Located at<\/strong>: <a target=\"_blank\" href=\"https:\/\/unsplash.com\/photos\/9BoqXzEeQqM\">https:\/\/unsplash.com\/photos\/9BoqXzEeQqM<\/a>. <strong>License<\/strong>: <em><a target=\"_blank\" rel=\"license\" href=\"https:\/\/creativecommons.org\/about\/cc0\">CC0: No Rights Reserved<\/a><\/em><\/li><\/ul><div class=\"license-attribution-dropdown-subheading\">All rights reserved content<\/div><ul class=\"citation-list\"><li>Acct 2102 Lofty Inc multi product break even CLASS ACTIVITY. <strong>Authored by<\/strong>: Carol Sargent. <strong>Located at<\/strong>: <a target=\"_blank\" href=\"https:\/\/youtu.be\/QsNAp26mFPI\">https:\/\/youtu.be\/QsNAp26mFPI<\/a>. <strong>License<\/strong>: <em>All Rights Reserved<\/em>. <strong>License Terms<\/strong>: Standard YouTube License<\/li><\/ul><\/div>\n\t\t\t\t\t\t <\/div>\n\t\t\t\t\t <\/div>\n\t\t\t <\/section>","protected":false},"author":364389,"menu_order":11,"template":"","meta":{"_candela_citation":"[{\"type\":\"original\",\"description\":\"Sales Mix\",\"author\":\"Joseph Cooke\",\"organization\":\"Lumen Learning\",\"url\":\"\",\"project\":\"\",\"license\":\"cc-by\",\"license_terms\":\"\"},{\"type\":\"copyrighted_video\",\"description\":\"Acct 2102 Lofty Inc multi product break even CLASS ACTIVITY\",\"author\":\"Carol Sargent\",\"organization\":\"\",\"url\":\"https:\/\/youtu.be\/QsNAp26mFPI\",\"project\":\"\",\"license\":\"arr\",\"license_terms\":\"Standard YouTube License\"},{\"type\":\"cc\",\"description\":\"Multiple books on a cart\",\"author\":\"Tom Hermans\",\"organization\":\"Unsplash\",\"url\":\"https:\/\/unsplash.com\/photos\/9BoqXzEeQqM\",\"project\":\"\",\"license\":\"cc0\",\"license_terms\":\"\"}]","CANDELA_OUTCOMES_GUID":"","pb_show_title":"on","pb_short_title":"","pb_subtitle":"","pb_authors":[],"pb_section_license":""},"chapter-type":[],"contributor":[],"license":[],"class_list":["post-87","chapter","type-chapter","status-publish","hentry"],"part":23,"_links":{"self":[{"href":"https:\/\/courses.lumenlearning.com\/suny-clinton-managerialaccounting\/wp-json\/pressbooks\/v2\/chapters\/87","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/courses.lumenlearning.com\/suny-clinton-managerialaccounting\/wp-json\/pressbooks\/v2\/chapters"}],"about":[{"href":"https:\/\/courses.lumenlearning.com\/suny-clinton-managerialaccounting\/wp-json\/wp\/v2\/types\/chapter"}],"author":[{"embeddable":true,"href":"https:\/\/courses.lumenlearning.com\/suny-clinton-managerialaccounting\/wp-json\/wp\/v2\/users\/364389"}],"version-history":[{"count":19,"href":"https:\/\/courses.lumenlearning.com\/suny-clinton-managerialaccounting\/wp-json\/pressbooks\/v2\/chapters\/87\/revisions"}],"predecessor-version":[{"id":2153,"href":"https:\/\/courses.lumenlearning.com\/suny-clinton-managerialaccounting\/wp-json\/pressbooks\/v2\/chapters\/87\/revisions\/2153"}],"part":[{"href":"https:\/\/courses.lumenlearning.com\/suny-clinton-managerialaccounting\/wp-json\/pressbooks\/v2\/parts\/23"}],"metadata":[{"href":"https:\/\/courses.lumenlearning.com\/suny-clinton-managerialaccounting\/wp-json\/pressbooks\/v2\/chapters\/87\/metadata\/"}],"wp:attachment":[{"href":"https:\/\/courses.lumenlearning.com\/suny-clinton-managerialaccounting\/wp-json\/wp\/v2\/media?parent=87"}],"wp:term":[{"taxonomy":"chapter-type","embeddable":true,"href":"https:\/\/courses.lumenlearning.com\/suny-clinton-managerialaccounting\/wp-json\/pressbooks\/v2\/chapter-type?post=87"},{"taxonomy":"contributor","embeddable":true,"href":"https:\/\/courses.lumenlearning.com\/suny-clinton-managerialaccounting\/wp-json\/wp\/v2\/contributor?post=87"},{"taxonomy":"license","embeddable":true,"href":"https:\/\/courses.lumenlearning.com\/suny-clinton-managerialaccounting\/wp-json\/wp\/v2\/license?post=87"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}