Question

Sales Mix and Break-Even Sales

Dragon Sports Inc. manufactures and sells two products, baseball bats and baseball gloves. The fixed costs are $477,000, and the sales mix is 60% bats and 40% gloves. The unit selling price and the unit variable cost for each product are as follows:

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

Bats | $60 | $50 | ||

Gloves | 150 | 90 |

**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

Baseball bats | Baseball gloves | |

Sales mix(a) | 60% | 40% |

Selling price per unit | $60 | $150 |

Less: Variable cost per unit | $50 | $90 |

Contribution margin per unit(b) | $10 | $60 |

(a)×(b) | $6 | $24 |

Combined Contribution per unit | $30($6+$24) |

A. Break-even sales (in units) for the overall Product E

= Fixed cost / Combined Contribution per unit

=$477,000/$30

=15,900 units

B.

Baseball bats (15,900×60%) =9,540 units

Baseball gloves (15,900×40%)=6,360 units

______×______

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