The product mix is all the products that a company offers for sale. The product mix structure has dimensions in both breadth and depth. Its breadth is measured by the number of product lines it offers, its depth by the variety of sizes, colors, and models it offers within each product line.
A company's product mix can be described by its breadth, depth, and consistency.
The breadth of the product mix refers to the number of different product lines that the company manages.
The depth of the product mix indicates how many versions of each product are offered within the line.
Product mix consistency refers to how similar your various product lines are in terms of end use, production requirements, distribution channels, or other factors.
calculation-of-the-balance-point-when-a-manufacturer-company-sells-two-or-more-products-1PRODUCTS MIXTURE
When a company sells more than one product, cost-volume-profit analysis is carried out using an average marginal contribution ratio for a given sales mix or a marginal contribution for profit.
If the actual product mix differs from the products on which the analysis was based, a divergence will arise between the expected profit, based on the Cost-Volume-Earnings model and the actual profit. Furthermore, the break-even point will not be the same if the mix of products actually sold differs from the mix of products used in the analysis.
PRODUCT LINE
The Product Line is a broad group of products that is created for fundamentally similar uses and has reasonably similar physical characteristics.
A product line can also be expanded by adding new items within the same category. There are several reasons to fill a product line: seek additional profit, try to satisfy distributors, try to capitalize on excess capacity, try to run a full-line company, and fill in the gaps to alienate competitors.
Example:
The company "X", SA, which produces the products: A, B and C, reports the following information for the month of August 200X.
RESOLUTION OF AVERAGE MARGINAL CONTRIBUTION
The Global Equilibrium Point volume is calculated, based on the average marginal contribution ratio (% of Marginal Contribution), for the determined sales mix.
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