Sales Mix and Break-Even Sales Dragon Sports Inc. manufactures and sells two pro

Question

Sales Mix and Break-Even Sales

Dragon Sports Inc. manufactures and sells two products, baseball bats and baseball gloves. The fixed costs are $504,000, and the sales mix is 70% bats and 30% gloves. The unit selling price and the unit variable cost for each product are as follows:

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?

Products Unit Selling Price Unit Variable Cost Bats $70 $50 Gloves 180 110

Explanation / Answer

Contribution margin =Sales-Variable cost

Contribution margin for Bats=(70-50)=$20

Contribution margin for Gloves=(180-110)=$70

Hence weighted Contribution margin=Respective Contribution margin*Respective sales mix

=(20*0.7)+(70*0.3)=$35

a.Breakeven point=Fixed cost/Weighted Contribution margin

=(504000/35)=14400 units.

b.

Baseball bats(14400*70%) 10080 units. Baseball gloves(14400*30%) 4320 units.

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