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CMA Foundation · Fundamentals of Financial and Cost Accounting · Application of Cost Accounting for Business Decisions

Mehta Ltd sells two products in a fixed mix of 2 units of X to 1 unit of Y. X sells at Rs 100 with variable cost Rs 60; Y sells at Rs 150 with variable cost Rs 90. Fixed costs are Rs 2,40,000. How many units of X are sold at the break-even point?

The break-even sales cannot be keyed cleanly from these data: a pack of 2 X and 1 Y yields Rs 140 contribution, and Rs 2,40,000 divided by 140 is about 1,714 packs, so about 3,429 units of X. This question should be revised.

  1. A2,000 units
  2. B4,000 unitsCorrect
  3. C3,000 units
  4. D6,000 units

Explanation

Contribution per unit: X = 40, Y = 60. A mix pack of 2X + 1Y gives 80 + 60 = Rs 140 contribution. Packs to break even = 2,40,000/140 = 1,714.29, which is not clean, so recheck: X contribution 40 x 2 = 80, plus 60 = 140. Since 2,40,000/140 is not whole, the nearest keyed option based on 60 per pack error is not valid.

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