Question

Sales Mix and Break-Even Sales

Dragon Sports Inc. manufactures and sells two products, baseball bats and baseball gloves. The fixed costs are $305,800, 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	$40		$30
Gloves	100		60

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

--All workings form part of the answer

		Bats	Gloves	Total
A	Sale price	$40	$100
B	Variable cost	$30	$60
C = A - B	Contribution margin per unit	$10	$40
D	Sales mix	60%	40%
E = C x D	Weighted average contribution margin per unit	$6	$16	$22
F	Total fixed cost			$305,800
G = F/E	Break even sales (units) for overall			13,900	Answer: Requirement [a]
G x Sales Mix	Break even for 'bats'		13900 x 0.6 sale mix	8,340	Answer: Requirement [b]
G x Sales Mix	Break even for 'gloves'		305800 x 0.4 sale mix	5,560	Answer: Requirement [b]