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# Breakeven Analysis for Varihary Company

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The Varihary Company manufactures 2 products Sintax and Gremmer, Which sells for \$10 and 15 respectively.
The following figures apply to the year ended 30September 2002
Sintax Gremmer
Sales \$90000 \$30000
Variable cost per unit \$6 \$12
a.Calculate the number of units of Sintax and Gremmer sold during the year ended 30 September 2002.

b.Calculate the contribution to Sales ratio for each product for the year ended 30 September 2002

c.Calculate the contribution to sales ratio for the company for the year ended 30 September 2002

d.Prepare profit/volume chart for the company for the year ended 30 September 2002 determine the break -even point the profit or loss at the present Sales figure and profit or loss at Sales of \$20000. Indicate clearly whether these are profits or losses. For the year ending 30 September 2003 the company expects to increase total Sales revenue by 10%,half of the total increase to apply to each product.Unit prices and costs will be unchanged and fixed costs will remain at \$10,000.

e.Calculate the number of units of Gremmer and Sintax which the company expects to sell during the year ending 30 September 2003.

f.Calculate the contribution to Sales ratio for the company for the year ending 30 September 2003

g.Draw a profit/volume chart for the company for year ended 30 September 2003.Showing break-even point,and profit or loss at the expected Sales figure and at Sales of \$60,000.

#### Solution Preview

The Varihary Company manufactures 2 products Sintax and Gremmer, Which sells for \$10 and 15 respectively.

The following figures apply to the year ended 30September 2002

Sintax Gremmer
Sales \$90000 \$30000
Variable cost per unit \$6 \$12

a.Calculate the number of units of Sintax and Gremmer sold during the year ended 30 September 2002.

No of units= Sales/ Sale Price
Sintax=90,000/10= 9000 Gremmer= 30,000/15=2000

b.Calculate the contribution to Sales ratio for each product for the year ended 30 September 2002

Contribution= Sale Price-Variable cost
Sintax=10-6=\$4 Gremmer=15-12=\$3

contribution to Sales ratio
Sintax=4/10= 40% Gremmer=3/15=20%

c.Calculate the contribution to sales ratio for the company for the year ended 30 September 2002 ...

#### Solution Summary

The breakeven analysis calculations have been carried out for the data provided.

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