Question

Zoke Ltd. manufactures eco-friendly furnishing and upholstery products. The fixed cost for the production process is ₹ 22,56,000. The following information is available about its range of products:

The following information is available about its range of products:

Variety	Cushion covers (per pair)	Curtains (set of two pairs)	Bed covers (Standard King size)
Selling Price (in ₹)	555	1150	1550
Variable Cost (in ₹)	275	550	750
Sales Mix	30%	40%	30%

From the given data, calculate the following:

1. Total weighted average contribution margin.
2. Breakeven Quantity for each product.
3. Break-even point (in ₹) for a pair of cushion covers.

Answer 1

Variety	Cushion covers (per pair)	Curtains (set of two pairs)	Bed covers (Standard King size)
Selling Price (in ₹)	555	1150	1550
Variable Cost (in ₹)	275	550	750
Contribution	280	600	800
Sales Mix	30%	40%	30%
Weighted Contribution	84	240	240

I. Total Weighted Contribution margin = 84 + 240 + 240 = ₹ 564

II. Break-even quantity for each variety:

Break Even Point = `("Total Fixed Cost")/("Weighted Contribution Margin")`

= `(22,56,000)/564`

= 4,000 units

Cushion covers = 4000 × 30% = 1,200 units

Curtains = 4000 × 40% = 1,600 units

Bed covers = 4000 × 30% = 1200 units

III. Breakeven in Rupees for cushion covers = Break even quantity × SP per unit
= 1200 × 555

= ₹ 6,66,000