Question

Sales Mix and Break-Even Sales Dragon Sports Inc. manufactures and sells two products, baseball bats and baseball gloves. The fixed costs are $319,200, and the sales mix is 70% bats and 30% gloves. The unit selling price and the unit variable cost for each product are as follows: Products Unit Selling Price Unit Variable Cost Bats $80 $60 Gloves 200 120 a. Compute the break-even sales (units) for both products combined. units b. How many units of each product, baseball bats and baseball gloves, would be sold at break-even point? Baseball bats units Baseball gloves units

Answer 1

	Bats	Gloves
Selling Price per unit	$80	$200
Less : Variable cost per unit	$60	$120
Contribution per unit	$20	$80
Sales Mix	70%	30%
Contribution x Sales Mix	$14	$24
Combined Contribution per unit	$38

(a)Break-even sales (units) for both products combined

= Fixed Costs / Combined Contribution per unit

= $3,19,200 / $38 per unit

= 8,400 Units

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

Baseball bats = 5,880 Units [ 8,400 x 70% ]

Baseball gloves = 2,520 Units [ 8,400 Units x 30% ]