Question

The FIFA sports store sells 1 World Cup soccer ball for every 4 regular style balls....

The FIFA sports store sells 1 World Cup soccer ball for every 4 regular style balls.

World Cup

Soccer Ball

Regular Style Soccer Ball

Sale price per ball

$20

$10

Variable cost per ball

$10

$ 5


Total Fixed Cost for FIFA sports $12,000. Assuming a constant sales mix. The break-even unit sales volume is:

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Answer #1

Sales Mix =

World Cup Soccer = 1 / 5

= 0.20

Regular Style = 4 / 5

= 0.80

The break-even unit sales volume is= Fixed Cost / Contribution Margin as per sales mix

= $ 12,000 / $ 6

= 2,000 Units

Hence the correct answer is 2,000 Units

Note:

World Cup Soccer Ball Regular Style Soccer Ball Total
Sale price per ball 20 10
Variable cost per ball 10 5
Contribution Margin Per ball 10 5
Sales mix 0.2 0.8
Contribution Margin as per sales mix (Contribution Margin Per ball * Sales Mix) 2 4 6
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