Question

Olongapo Sports Corporation is the distributor in the Philippines of two premium golf balls-the Flight Dynamic and the Sure Shot. Monthly sales, expressed in pesos (P), and the contribution margin ratios for the two products follow. Fixed expenses total P183,750 per month.
(b) Compute the break-even point for the company based on the current sales mix.

Answer 1

                                     = Fixed Expenses/Weighted Average CM Ratio

Break-even point         = P183,750 / (210,000/400,000)    

                                     = P350,000      

The break-even point is the point at which total costs equal total sales, and there is no loss or profit for a small business. This means that we have reached a production stage where production costs are comparable to product sales.

The break-even point is used in several areas of economics and finance. In accounting terms, it refers to the level of production at which the total revenue from production equals the total cost of production. In investing, the break-even point is the point at which the original cost equals the market price.

Learn more about the break-even point at

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