Question

Dragon Sports Inc. manufactures and sells two products, baseball bats and baseball gloves. The fixed costs...

Dragon Sports Inc. manufactures and sells two products, baseball bats and baseball gloves. The fixed costs are \$616,000, and the sales mix is 40% bats and 60% 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

a. Computation of the break-even sales(units) for both products combined:-

Contribution Margin = Sales price -Variable cost

Weighted Average Contribution Margin = (\$80-\$60)*40% +(\$200-\$120)*60%

Weighted Average Contribution Margin = \$56

Break-even sales(units) = Fixed cost / Weighted Average Contribution Margin

Break-even sales(units) = \$616,000/\$56

Break-even sales(units) = 11,000 units

b. Baseball bats = 11,000*40% = 4,400 Units

Baseball gloves = 11,000*60% = 6,600 units

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