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 $440,000, 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:

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?

Products Unit Selling Price Unit Variable Cost Bats $80 $60 Gloves 200 120

Explanation / Answer

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

=(20*0.6)+(80*0.4)

=$44

1.Breakeven point=Fixed cost/Weighted average Contribution margin

=(440,000/44)

=10000 units.

b.

Bats Gloves Contribution margin(Sales-Variable cost) (80-60)=$20 (200-120)=$80

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