Question

3. Sales mix and CVP Analysis:   Goalie’s Ball, Inc. produces and sells three different types of soccer balls: basic, deluxe, and pro. Monthly information regarding the three types of balls are shown below:

	Basic	Deluxe	Pro
Sales volume (Units)	5,500	4,000	500
Price per unit	$20.00	$35.00	$60.00
VC per unit	$8.00	$19.00	$32.00
Total Fixed Costs (FC): $108,500

1. Determine the sales mix percentage (%) for the three products.
2. Determine the contribution margin (CM) per unit for each of the three products.
3. Calculate the weighted average contribution margin (WACM) per unit (round your final answer to two decimal places).
4. Calculate the total number of units that Goalie’s Ball’s must sell to break-even. Round up to the nearest whole unit.
5. Based on sales mix, calculate the number of units of each type of ball that would be sold at the firm’s break-even point.

Answer 1

a.)		Basic	Deluxe	Pro
	Sales Mix Percentage	55%	40%	5%
		=5500/(5500+4000+500)	=4000/(5500+4000+500)	=500/(5500+4000+500)

b.)		Basic	Deluxe	Pro
	Sales Price per unit	20	35	60
	Less: VC per unit	8	19	32
	Contribution margin per unit $	12	16	28
c.)		Basic	Deluxe	Pro
	Contribution margin per unit	12	16	28
	x Sales Mix %	55%	40%	5%
	Weighted Average Contribution margin	6.60	6.40	1.40
	Weighted Average Contribution margin	$ 14.40	=6.6+6.4+1.4
d.)	Total number of units that Goalie’s Ball’s must sell to break-even	7,535	=108500/14.4

e.)	Basic	4,144	=7535*55%
	Deluxe	3,014	=7535*40%
	Pro	377	=7535*5%
	Total	7,535