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

______×______