Homework SourseSales Mix and BreakEven Sales Dragon Sports Inc manufactures
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 |
Solution
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. |
