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per unit Problem 9.39 (B.E. Point when sales mix ratio is given). PE Limited produces...

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Accounting

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per unit Problem 9.39 (B.E. Point when sales mix ratio is given). PE Limited produces and sells two products, P and E. Budgets prepared for the next six months give the following information: Product P per unit Product E Selling price Rs. 10.00 Rs. 12.00 Variable costs: Production and selling 5.00 10.00 Common fixed costs; production and selling (for six months) 5,61,600 You are required, in respect of the forthcoming six months, (i) to state what the break-even point in rupees will be and the number of each product this figure represents if the two products are sold in the ratio 4P to 3E. (ii) to state the break-even point in rupees and the number of products this figure represents if the sales mix changes to 4P to 4E (ignore fractions of products); (iii) to advise the sales manager which product mix should be better, that in (a) (i) above or that in (a) (ii) above, and why; (iv) to advise the sales manager which of the two products should be concentrated on and the reason(s) for your recommendation-assume that whatever can be made can be sold, that both products go through a machining process and that there are only 32,000 machine hours available, with product P requiring 0.40 hour per unit and product E requiring 0.10 hour per unit

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