Question

Identify which of the following is not a benefit of estimating the breakeven point for a multi-product business.

विकल्प

• Setting a profit goal

• Setting sales targets

• Determining the sales mix ratio

• Determining the products that are not contributing to meet the fixed expenses

Answer 1

Determining the sales mix ratio

Explanation:

In a multi-product business, the break-even point (BEP) helps determine the sales volume needed to cover total costs, set sales targets, and identify low-contributing products. However, the sales mix ratio (the proportion in which different products are sold) must be known beforehand to calculate the break-even point; it is an input, not an outcome of the analysis. Hence, determining the sales mix ratio is not a benefit of estimating the break-even point.