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 $544,000, and the sales mix is 40% bats and 60% 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 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?

Baseball bats____ units

Baseball gloves _____units

Explanation / Answer

Contribution margin =Sales-Variable costs

Contribution margin for Bats=(50-40)=$10

Contribution margin for Gloves=(130-80)=$50

Hence weighted Contribution margin=RespectiveContribution margin*Respective probability

=(10*0.4)+(50*0.6)=$34

1.Overal breakeven=Fixed cost/weighted Contribution margin

=(544000/34)=16000 units

2Bats=(16000*0.4)=6400 units

Gloves=(16000*0.6)=9600 units.

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