Question

Dragon Sports Inc. manufactures and sells two products, baseball bats and baseball gloves. The fixed costs are $260,400, and the sales mix is 40% bats and 60% gloves. The unit selling price and the unit variable cost for each product are as follows:

Products	Unit Selling Price		Unit Variable Cost
Bats	$40		$30
Gloves	100		60

a. Compute the break-even sales (units) for both products combined.
fill in the blank 1 units

b. How many units of each product, baseball bats and baseball gloves, would be sold at break-even point?

Baseball bats	fill in the blank 2 units
Baseball gloves	fill in the blank 3 units

Answer 1

a.) Break even point for both product combined = Total Fixed expenses / (Weighted average selling price - weighted average variable expenses)

Weighted average selling price = 40 *.4 + 100 * .6 = 16 + 60 = 76

Weighted average variable cost = 30 * .4 + 60 * .6 = 12 + 36 = 48

Therefore Breakeven sales in units = 260400 / (76 - 48 ) = 9300 units

b.) The number of units of each product to be sold : Bat = 9300 * 40% = 3720 units

Gloves = 9300 * 60% = 5580 units

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answered by: anonymous