Question

Sales mix and break-even sales Dragon Sports Inc. manufactures and sells two products, baseball bats and baseball gloves. The fixed costs are $273,600, 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 $60 $60 Gloves 75 120 This information has been collected in the Microsoft Excel Online file. Open the spreadsheet, perform the required analysis, and input your answers in the questions below. х Open spreadsheet a. Compute the break-even sales (units) for the overall enterprise product, E units b. How many units of each product, baseball bats and baseball gloves, would be sold at the break even point? Baseball bats: units Baseball gloves: units

Answer 1

1) 7600 units

breakeven sales in dollar=total fixed cost/weighted average cs ratio

total fixed cost=$273600

weighted average cs ratio=contribution per mix/selling price per mix

sales ratio for bats and gloves is 2:8 or 20% and 80% rexpectively

contribution per unit for

bats=$60-$60=$0

gloves=$120-$75=$45

contribution per mix=($0*2)+($45*8)=$360

selling price per mix=($60*2)+($120*8)=$120+$960=$1080

weighted average cs ratio=$360/$1080=0.333333333 times (for accurate answer)

breakeven sales in dollar=$273600/0.333333333=$820800

the breakeven sales amount is seperated for each product's breakeven sales on the basis of selling price per mix

breakeven sales of

bats=$820800*(120/1080)=$91200

gloves=$820800*(960/1080)=$729600

to convert breakeven sales in dollar to units divide each product's sales with its sellin price.

breakeven sales in units for

bats=$91200/$60=1520 units

gloves=$729600/$120=6080 units

total units at breakeven=1520+6080=7600 units

2) 1520 units of baseball bats and 6080 units of baseball gloves

breakeven sales in dollar=total fixed cost/weighted average cs ratio

total fixed cost=$273600

weighted average cs ratio=contribution per mix/selling price per mix

sales ratio for bats and gloves is 2:8 or 20% and 80% rexpectively

contribution per unit for

bats=$60-$60=$0

gloves=$120-$75=$45

contribution per mix=($0*2)+($45*8)=$360

selling price per mix=($60*2)+($120*8)=$120+$960=$1080

weighted average cs ratio=$360/$1080=0.333333333 times (for accurate answer)

breakeven sales in dollar=$273600/0.333333333=$820800

the breakeven sales amount is seperated for each product's breakeven sales on the basis of selling price per mix

breakeven sales of

bats=$820800*(120/1080)=$91200

gloves=$820800*(960/1080)=$729600

to convert breakeven sales in dollar to units divide each product's sales with its sellin price.

breakeven sales in units for

bats=$91200/$60=1520 units

gloves=$729600/$120=6080 units