Data related to the expected sales of snowboards and skis for Winter Sports Inc.
ID: 2466401 • 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: The estimated fixed costs for the current year are $466,980. Required: 1. Determine the estimated units of sales of the overall (total) product necessary to reach the break-even point for the current year. units 2. Based on the break-even sales in units in part 1, determine the unit sales of both snowboards and skis for the current year. Snowboards: units Skis: units 3. 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. unitsExplanation / Answer
Product
Snowboard
Skis
Sales price Per Unit
270
410
Variable Price Per Unit
180
190
Contribution Per unit
90
220
Sales Mix Percentage
30%
70%
Sum: Weighted avg CM Per Unit
27
154
181
Total Fixed Cost
$466,980
Sum: Weighted avg CM Per Unit
$181
Break-even Point in Units of Sales Mix
2,580
Break-even Point in Units of Sales Mix = Total Fixed Cost ÷ Weighted Average CM per Unit
=466,980/181=2,580 units
Contribution Per unit=Sales price Per Unit-Variable Price Per Unit
Sum: Weighted avg CM Per Unit= Contribution Per unit x Sales Mix Percentage
Product
Snowboard
Skis
Sales Mix Percentage
30%
70%
X Total Break even units
2,580
2,580
Break even point in units
774
1,806
If Sales mix changed 70% and 30%
Product
Snowboard
Skis
Sales price Per Unit
270
410
Variable Price Per Unit
180
190
Contribution Per unit
90
220
Sales Mix Percentage
70%
30%
Sum: Weighted avg CM Per Unit
63
66
129
Total Fixed Cost
$466,980
Sum: Weighted avg CM Per Unit
$129
Break-even Point in Units of Sales Mix
3,620
Product
Snowboard
Skis
Sales price Per Unit
270
410
Variable Price Per Unit
180
190
Contribution Per unit
90
220
Sales Mix Percentage
30%
70%
Sum: Weighted avg CM Per Unit
27
154
181
Total Fixed Cost
$466,980
Sum: Weighted avg CM Per Unit
$181
Break-even Point in Units of Sales Mix
2,580
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