Question

Sales Mix and Break-Even Sales

Dragon Sports Inc. manufactures and sells two products, baseball bats and baseball gloves. The fixed costs are $634,200, 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	$50		$40
Gloves	130		80

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

Contribution margin=Sales-Variable cost

Contribution margin for:

Bats=(50-40)=$10 per unit

Gloves=(130-80)=$50 per unit

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

=(10*0.2)+(50*0.8)=$42 per unit

a.Overall breakeven=Fixed cost/Weighted Average Contribution margin

=634,200/42=15100 units

b.

Baseball bats(15100*20%)	3020 units
Baseball gloves(15100*80%)	12080 units.