Question

Sales Mix and Break-Even Sales

Dragon Sports Inc. manufactures and sells two products, baseball bats and baseball gloves. The fixed costs are $256,000, and the sales mix is 80% bats and 20% gloves. The unit selling price and the unit variable cost for each product are as follows:

Products	Unit Selling Price		Unit Variable Cost
Bats	$40		$30
Gloves	100		60

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	Gloves
A	Contribution margin per unit	$10	$40
B	Sales Mix	80%	20%
C = A x B	Weighted Contribution margin	$8	$8

D	Fixed Cost	$256,000
E = 8+8	Weighted Contribution margin	$16
F = D/E	Total Break Even units	16,000

[a] Break even = 16,000 units

[b]
Baseball bats = 16000 x 80% = 12,800 units
Baseball gloves = 16000 x 20% = 3,200 units