Question

Sales Mix and Break-Even Sales

Dragon Sports Inc. manufactures and sells two products, baseball bats and baseball gloves. The fixed costs are $318,000, 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	Unit Selling Price		Unit Variable Cost
Bats	$60		$50
Gloves	150		90

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

Answer 1

Working Notes:
	CALCULATION OF WEIGTED CONTRIBUTION MARGIN
	PARTICULARS	Baseball Bats	Baseball Gloves
	Selling Price Per Unit=	$                           60	$                            150
	Less: Variable Cost	$                           50	$                               90
	Contrbution Margin (A)	$                           10	$                               60
	X Sales Mix Percentage (B)	60.00%	40.00%
	Weighted Contribution Margin (AXB)	$                       6.00	$                         24.00
	Weighted Average CM Per unit ($ 6 + $ 24)	$                     30.00
SOLUTION: A
	CALCULATION OF THE BREAK EVEN POINT IN UNITS
	Break Even point =      Fixed Cost / Weighted Avg. Contribution Margin Per Unit
	Break Even point =
	Fixed Cost =	$                318,000
	Divide By	"/" By
	Weighted Avg. Contribution Margin Per Unit	$                           30
	Break Even point	10600	Units
SOLUTION: B
	Baseball Bats = 10,600 Units X 60% =	6,360	Bats
	Baseball Gloves = 10,600 Units X 40% =	4,240	Gloves
	Answer =
	Baseball Bats	6,360	Bats
	Baseball Gloves	4,240	Gloves