Calculate the BEP and indifference point of given companies
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Company B and Company D sell the same product at the same price in a competitive market. Company B sells at a contribution margin of 20%, with fixed costs amounting to $75,000. Company D sells the same product at 26% contribution margin and incurred $105,000 in fixed costs.
a. Compute the breakeven point of each company.
b. Compute the indifference point of the two companies in terms of dollar sales volume.
c.Compute the profit of each company at indifference point.
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Solution Summary
Solution depicts the steps to estimate the BEP in the given cases. It also calculate the indifference point of given companies.
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a)
Break even sales of company B=Fixed Cost/CM ratio=75000/20% =$ 3750000.00
Break even sales of company D=Fixed Cost/CM ...
Education
- BEng (Hons) , Birla Institute of Technology and Science, India
- MSc (Hons) , Birla Institute of Technology and Science, India
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