5-Product Break-Even Analysis (Allocated Overhead)

Example Problem: "The Five Star Line"

You are tasked with finding the multi-product break-even point for a company selling five distinct products. Use the data provided below to populate the *Price*, *Sales Mix (%)*, and the *Cost Account Worksheet* sections.

1. Common (Allocated) Fixed Costs (Category 1)

Account	Annual Cost ($)
Rent for Main Office	$100,000
Corporate Salaries	$150,000
Marketing Overhead	$50,000
Total Common Fixed Cost	$300,000

2. Product-Specific Data (Price, Mix, Direct Costs)

Product	Price (P)	Mix (%)	Category 2: Direct FC (Accounts)	Category 3: Direct VC (Per Unit Accounts)
Product 1	50	25	Equipment Lease ($20,000)	Raw Material ($10), Labor ($5)
Product 2	75	25	Facility Fee ($15,000), Manager Salary ($10,000)	Raw Material ($15), Labor ($8), Packaging ($2)
Product 3	120	20	Machine Maintenance ($40,000)	Components ($40), Labor ($20)
Product 4	40	15	None ($0)	Raw Material ($5), Labor ($1)
Product 5	150	15	Warehouse Rent ($30,000), Dedicated Team ($20,000)	Specialized Parts ($70), Quality Check ($10)

Instructions and Key Definitions

Key Cost Definitions:

1. Common Fixed Costs: Annual costs incurred by the company that support *all* products and are allocated based on **Sales Mix (%)**.

2. Direct Fixed Costs: Annual fixed costs that *can* be directly traced to a specific product. These are summed for each product.

3. Direct Variable Costs: Costs that change in total directly with the number of units produced (entered on a **per-unit** basis).

How to Enter Data:

Table Inputs: Enter **Price** and **Sales Mix (%)** in the main table. (Mix must total 100%).
Worksheet Input: Use the **Cost Account Worksheet** below to itemize and input all costs for Categories 1, 2, and 3.
Select Product: For Categories 2 & 3, use the **"Select Product"** dropdown menus within the worksheet to enter the correct product's direct costs.

Category 1: Common (Allocated) Fixed Costs

NOTE: This value is automatically calculated from the Category 1 section in the worksheet below.

Total Common Fixed Costs ($):

Product Data & Cost Allocation

Category 2: Direct Product Fixed Cost (Total $): **Derived from Worksheet.**

3. Direct Product Variable Cost (per unit): **Derived from Worksheet.**

Product	Price (P)	Cat 1: Allocated Common Fixed Cost	Cat 2: Direct Prod. Fixed Cost (Total $)	Total Product Fixed Cost (1 + 2)	Cat 3: Direct Prod. Variable Cost (per unit)	Sales Mix (%)	CM (P-V)	Weighted CM

Cost Account Worksheet (Itemized Inputs - 15 Accounts Each)

Enter itemized costs below. Their totals automatically update the calculation table above.

1. Common Fixed Costs (Total $)

Total: $0

Account Name | Annual Amount:

2. Direct Fixed Costs (Total $ per Product)

Select Product:

Account Name | Annual Amount:

Current Product Total: $0

3. Direct Variable Costs (Per Unit)

Select Product:

Account Name | Cost per Unit:

Current Product Per-Unit Cost: $0

Company-Wide Break-Even Summary

Total Fixed Costs Calculation

Category 1 (Common): $0 + Category 2 (Total Direct): $0

= $0

Weighted Avg. Contribution Margin (WACM)

$0.00

Total Break-Even Units

0

Total Break-Even Revenue

$0

Multi-Product Break-Even Analysis