Question

# Dragon Sports Inc. manufactures and sells two products, baseball bats and baseball gloves. The fixed costs...

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

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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