A problem arises when the company sells more than one type of product. Breakeven analysis may be performed for each type of product if fixed costs are determined separeately for each product.
However, fixed costs are normally incurred for all the products hence a need to compute for the composite or multiproduct breakeven point.
MultiProduct BreakEven Point Formula
In computing for the multiproduct breakeven 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 
BEP in dollars =  Total fixed costs 
Weighted average CM ratio 
Example
Belle Company manufactures and sells three products: Products A, B, and C. The following data has been provided the company.
A 
B 
C 

Selling price  $100 
$120 
$50 

Variable cost per unit  60 
90 
40 

Contribution margin per unit  40 
30 
10 

Contribution margin ratio  40% 
25% 
20% 
The company sells 5 units of C for every unit of A and 2 units of B for every unit of A. Hence, the sales mix is 1:2:5. The company incurred in $120,000 total fixed costs.
1. Multiproduct breakeven point in units
BEP in units =  Total fixed costs 
Weighted average CM per unit 

$120,000 

$18.75 

BEP in units =  6,400 units 
a. Computation of weighted average CM per unit:
∑(CM per unit x Unit sales mix ratio)  
Product A ($40 x 1/8)  $ 5.00 
Product B ($30 x 2/8)  7.50 
Product C ($10 x 5/8)  6.25 
WA CM per unit  $18.75 
The weighted average CM may also be computed by dividing the total CM by the total number of units.
WA CM per unit =  (40x1)+(30x2)+(10x5) 
= 18.75 
8 
b. Breakdown of the breakeven sales in units:
(BE point x Unit sales mix ratio)  
Product A (6,400 units x 1/8)  800 units 
Product B (6,400 units x 2/8)  1,600 
Product C (6,400 units x 5/8)  4,000 
Total  6,400 units 
The company must produce and sell 800 units of Product A, 1,600 units of Product B, and 4,000 units of Product C in order to breakeven.
2. Multiproduct breakeven point in dollars
BEP in dollars =  Total fixed costs 
Weighted average CM ratio 

$120,000 

25.4237% 

BEP in dollars =  $472,000 
a. Computation of weighted average CM ratio:
∑(CMR x Sales revenue ratio)  
Product A (40% x 100/590)  6.7797% 
Product B (25% x 240/590)  10.1695% 
Product C (20% x 250/590)  8.4745% 
WA CM per unit  25.4237% 
Take note that this time, the ratio used is developed from the ratio of individual sales to total sales.
Product A (100x1)  100 
Product B (120x2)  240 
Product C (50x5)  250 
Total Sales  590 
The weighted average CM may also be computed by dividing the total CM by the total sales.
WA CM ratio =  (40x1)+(30x2)+(10x5) 
(100x1)+(120x2)+(50x5) 

WA CM ratio =  25.4237% 
b. Breakdown of the breakeven sales revenue:
(BE point x Sales revenue ratio)  
Product A ($472,000 x 100/590)  $ 80,000 
Product B ($472,000 x 240/590)  192,000 
Product C ($472,000 x 250/590)  200,000 
Total  $472,000 
The company must generate sales of $80,000 for Product A, $192,000 for product B, and $200,000 for Product C, in order to breakeven. Alternatively, these can be computed by multiplying the individual breakeven point in units for each product by their corresponding selling price, i.e. 800 units x $100 for Product A = $80,000, 1,600 units x $120 for Product B = $192,000, and 4,000 units x $50 for Product C = $200,000.