Question

Dragon Sports Inc. manufactures and sells two products, baseball bats and baseball gloves. The fixed costs are $571,200, and the sales mix is 20% bats and 80% gloves. The unit selling price and the unit variable cost for each product are as follows:

Products |
Unit Selling Price |
Unit Variable Cost |
||

Bats | $50 | $40 | ||

Gloves | 130 | 80 |

**a.** Compute the break-even sales (units) for the
overall enterprise product, E.

units

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

Baseball bats | units |

Baseball gloves | units |

Answer #1

Bats contribution margin = Selling price - Variable cost

= 50 - 40

= $10

Gloves contribution margin = 130 - 80 = $50

Sales mix is 20% bats and 80% gloves therefore contribution margin will be calculated in the same ratio

Combined contribution margin

= 10*20% + 50*80%

= 2 + 40

= $42

Breakeven units = Fixed cost/ contribution margin per unit

= 571,200/42

= 13,600 units

B) Number of break even units

Bats = 13,600*20% = 2,720 units

Gloves = 13,600*80% = 10,880 units

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