You could better explain your reasoning in the part where you are calculating PE in pieces (the quantity to sell for each product) If you analyze the operation for each product (A and B) what is being said here it is:
Number of pieces to sell of Product A =
Weighted Fixed Cost of A
—————————————————-
1 - (A variable cost / A round price)
———————————————————————-
Pcio round of A
If we apply elementary algebra it can be seen that this formula is simplified, being as follows:
Number of pieces to sell of product A = Weighted Fixed Cost of A
———————————————————-
Net Price of A - Variable Cost of A
If you look at the denominator: Sales Price of A - Variable cost of A = Contribution Margin on sales, my question is, where did the reasoning come from that to calculate the PE in pz per product in a product mix (number of pieces to sell for a product mix) is calculated by dividing the weighted fixed cost of the product by the contribution margin over the sales???
If you multiply the results obtained with this formula of the number of pieces per product by its unit sale price and then add it, the result is completely different from the PE calculation based on the sales value, taking the data shown here in the article we would have:
PE based on sales value = $ 4,400,808.63 (This method is clear)
PE in pieces (This method to be explained)
A = 674 units X 2,350 = $ 1,583,900
B = 895 units X 3,125 = $ 2,796,875
TOTAL Sales ————— $ 4,380,775
Different results in the value of sales, if the exercise was done for more than 2 products, the impact on the differences for each product would be greater, it would give you a mix of products wrong.
I don't know who the author of this article is, but it would be interesting to know what his reasoning is to calculate the product mix as he did. Or where did it come from?
Webyempresas.com this type of thing confuses and throws wrong data for people who apply the formulas without reasoning, I do not want to imagine if an entrepreneur is looking for help to calculate the PE for an investment that he wants to make in a franchise where they sell more than 20 products and follow this formula to calculate your mix, it will throw you a serious error and the information for making your decision would be wrong.
The sales equilibrium point is exact, the issue is that of units has a lot of difference, I already checked it and it is like that!
hey, thank you very much for the info, it's really useful, and I've been looking for this, but I haven't found anything that really answered what I needed to read,
Thank you very much again, greetings.
The error is in the equilibrium point formula in units, it is the fixed cost attributable to each product (1160000) divided into (pv-cv)
Well explained Ing. Riquelme I thank you for the information, you just helped me with my monograph 🙂
In this type of calculation there will always be differences but very small, insignificant, and if it is done using computers then it will be more exact, as said
there are roundings because 10.3 units cannot be sold, hence the differences, but they are manageable. - Dear friends, mathematics in practice is not always exact
for example... if 10 workers build a brick room in 30 days, then 20 workers will do it in 15 days,... and so if there were 1000 workers, they might do it in 1 hour, and that is impossible because you have to wait for the cement and other variables to harden …… ..
