Question

Sales Mix and Break-Even Sales Dragon Sports Inc. manufactures and sells two products, baseball bats and baseball gloves. The fixed costs are $756,000, and the sales mix is 20% bats and 80 gloves. The unit selling price and the unit variable cost for each product are as follows: Products Unit Selling Price Unit Variable Cost Bats $70 $50 110 Gloves 180 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 units Baseball gloves

Answer 1

Contribution margin=Sales-Variable cost  

	Contribution margin
Bats	(70-50)=$20
Gloves	(180-110)=$70

Weighted average Contribution margin=Respective Contribution margin*Respective sales mix

=(20*0.2)+(70*0.8)=$60

a.Overall Breakeven=Fixed expenses/Contribution margin

=(756,000/60)=12600 units

b.

Baseball bats(12600*20%)	2520 units
Baseball gloves(12600*80%)	10080 units.