Question

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

Answer 1

Answer :-

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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