The Baltic Company has three product lines of sugar substitutes-Alpha, Beta, and Gama. The contribution margin...

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The Baltic Company has three product lines of sugar substitutes-Alpha, Beta, and Gama. The contribution margin for these artificial sweeteners is: £7 (Alpha), £5 (Beta), and £4 (Gama), respectively. The Chief executive Officer forecasts sales of 120,000 units in the coming period, consisting of 20,000 units of Alpha, 60,000 units of Beta, and 40,000 units of Gama. The company's fixed costs for the period are £720,000. Required: a) What is the company's breakeven point in units and sales revenue, assuming that the given sales mix is unaltered? Explain why it is essential to keep the sales mix constant? The Baltic Company has three product lines of sugar substitutes-Alpha, Beta, and Gama. The contribution margin for these artificial sweeteners is: £7 (Alpha), £5 (Beta), and £4 (Gama), respectively. The Chief executive Officer forecasts sales of 120,000 units in the coming period, consisting of 20,000 units of Alpha, 60,000 units of Beta, and 40,000 units of Gama. The company's fixed costs for the period are £720,000. Required: a) What is the company's breakeven point in units and sales revenue, assuming that the given sales mix is unaltered? Explain why it is essential to keep the sales mix constant?

Answer rating: 100% (QA)

To calculate the companys breakeven point in units and sales revenue we need to find the point at which the total contribution margin covers the fixed ... View the full answer