Question

Baked Delight Ltd. is a well known name in breads and bakery products. It has diversified into flavoured fox nuts and popcorn. The two were introduced as smart snacking options for health and diet conscious people. To start with, both will be sold in a standard packing of 50 gm each. Fixed cost for these will be ₹ 1,00,000. Sale price and variable cost per unit is as follows:

Particulars	Classic salted Fox nuts	Caramel salted Popcorn
Sale price per unit (₹)	120	80
Variable cost per unit (₹)	70	30
Sales mix percentage (%)	40	60

From the given information calculate Break-Even Point in units and rupees.

Answer 1

Contribution = Sales Price Per Unit − Variable Cost Per Unit

Classic salted = 120 − 70 = 50

Caremal salted = 80 − 30 = 50

Weighted average contribution

Classic salted = 50 × 40% = 20rs

Caremal salted = 50 × 60% = 30rs

Break-even point in units = `100000/50` = 2000 units

Classic salted = 2,000 × 40% = 800 units

Caremal salted = 2,000 × 60% = 1,200 units

Break-even point in rupees

Classic salted = 800 × 120 = 96,000 rs

Caremal salted = 1200 × 80 = 96,000 rs