The determination of the break-even point in CVP analysis is easy once variable and fixed costs are determined. A problem arises when the company sells more than one type of product.

For companies that produce more than one product, break-even analysis may be performed for each type of product if fixed costs can be determined separately for each product.

However, fixed costs are normally incurred for all the products hence a need to compute for the composite or multi-product break-even point.

**Multi-Product Break-Even Point Formula**

In computing for the multi-product break-even point, the weighted average unit contribution margin and weighted average contribution margin ratio are used.

**BEP (In Units) = Total fixed costs / Weighted average CM per unit**

In the above formula, the weighted average selling price is worked out as follows:

(Sale price of product A × Sales percentage of product A) + (Sale price of product B × Sale percentage of product B) + (Sale price of product C × Sales percentage of product C) + …….

and the weighted average variable expenses are worked out as follows:

(Variable expenses of product A × Sales percentage of product A) + (Variable expenses of product B × Variable expenses of product B) + (Variable expenses of product C × Sales percentage of product C) + …….

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