21-3 Excercises & Problems Sales Mix and Break-Even Sales Dragon Sports Inc. man

ID: 2558589 • Letter: 2

Question

21-3 Excercises & Problems Sales Mix and Break-Even Sales Dragon Sports Inc. manufactures and sells two products, baseball bats and baseball gloves. The fixed costs are $506,000, 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: Products Bats Gloves a. Compute the break-even sales (units) for both products combined. Unit Selling Price Unit Variable Cost $80 $60 200 120 units b. How many units of each product, baseball bats and baseball gloves,would be sold at break-even point? Baseball bats Baseball gloves units units

Explanation / Answer

Answer

Product

Bats

Gloves

Selling price per unit

200

Variable cost per unit

120

Contribution Margin per unit

Sales Mix

60%

40%

Weighted Contribution Margin per unit

Total Weighted Contribution Margin per unit = Weighted Contribution Margin of (Bats + Gloves)

= 12 + 32

Total Weighted Contribution Margin per unit = 44

Breakeven point (In Units) = Total Fixed Cost / Total Weighted Contribution Margin per unit

= $506,000 / 44

Breakeven point (In Units) = 11,500 Units

Bats to be sold at breakeven point = Breakeven point (In Units) * Sales mix of Bat

= 11,500 Units * 60%

Bats to be sold at breakeven point = 6,900 Units

Gloves to be sold at breakeven point = Breakeven point (In Units) * Sales mix of Gloves

= 11,500 Units * 40%

Bats to be sold at breakeven point = 4,600 Units