Data related to the expected sales of snowboards and skis for Winter Sports Inc.
ID: 2387965 • Letter: D
Question
Data related to the expected sales of snowboards and skis for Winter Sports Inc. for the current year, which is typical of recent years, are as follows:Products Unit Selling Price Unit Variable Cost Sales Mix
Snowboards $250 $170 30%
Skis 550 260 70%
The estimated fixed costs for the current year are $1,298,440.
Assume that the sales mix was 70% snowboards and 30% skis. Determine the estimated units of sales of the overall product necessary to reach the break-even point for the current year.
_______units
Explanation / Answer
SALES MIX IS 70 % SNOWBOARDS AND 30 % SKIS
selling price of snowboard = 250
Variable cost = 170
Contribution margin for snowboards = 250 - 170 = $80
Selling price of ski = $550
Variable cost = $ 260
contribution margin for skis = 550 - 260 = $ 290
let the sales required for break even = x
sale of snow boards = 0.7 * x
sale of skis = 0.3 x
at break even
No.of units * contribution margin = Fixed cost
0.7 x * 80 + 0.3 x * 290 = 1298440
x = 1298440/(0.7*80 + 0.3*290) = 9080 units
so total of 9080 units are required for Break even point.
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