budgeted break-even point

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Boom Ltd sells two products, the ‘Crash’ and the ‘Bang’. Budgeted sales by product and in total for the coming month are shown below:

Crash

Bang

Total

Percentage of total unit sales

25%

75%

100%

Sales volume (units)

50,000

150,000

200,000

£

£

£

Sales

1,000,000

1,800,000

2,800,000

Less variable expenses

(600,000)

(1,200,000)

(1,800,000)

Contribution

400,000

600,000

1,000,000

Less fixed expenses

(640,000)

Profit

360,000

You are required to:

a) Calculate the budgeted break-even point in units, and the margin of safety in %. (10 marks)

b) Calculate the unit sales required to achieve a profit of £500,000. (5 marks)

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