Question

Sales Mix and Break-Even Sales Dragon Sports Inc. manufactures and sells two products, baseball bats and baseball gloves. The fixed costs are $585,200, and the sales mix is 60% bats and 40% gloves. The unit selling price and the unit variable cost for each product are as follows: Products Unit Selling Price Unit Variable Cost Bats $60 $80 200 Gloves 120 a. Compute the break-even sales (units) for both products combined. 15,500 x units b. How many units of each product, baseball bats and baseball gloves, would be sold at break-even point? Baseball bats 6,200 9,300 X units X units Baseball gloves

Answer 1

Ans.	Calculations for Contribution margin per unit:
		Bats	Gloves
	Selling price per unit	$80.00	$200.00
	Less: Variable cost per unit	-$60.00	-$120.00
	Contribution margin per unit (a)	$20.00	$80.00
	Calculations for Weighted Contribution margin per unit:
		Contribution margin per unit (a)	Sales mix (b)	Weighted Contribution margin (a*b)
	Baseball bats	$20.00	60%	$12
	Baseball gloves	$80.00	40%	$32
	Weighted Contribution margin			$44
Ans. A	Break even point in units (combined)   =   Total fixed cost/ Weighted contribution margin
		$585,200 / $44
		13,300 units
Ans. B	Break even point of particular products   =    Break even point in units combined * Sales mix
	Baseball bats	13,300 * 60%
		7,980	units
	Baseball gloves	13,300 * 40%
		5,320	units