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Swanson Company has two divisions; Sporting Goods and Sports Gear. The sales mix is 65% for...

Swanson Company has two divisions; Sporting Goods and Sports Gear. The sales mix is 65% for Sporting Goods and 35% for Sports Gear. Swanson incurs $6,660,000 in fixed costs. The contribution margin per unit for Sporting Goods is 30, while for Sports Gear it is 50. What is the break-even in units

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Expert Solution

Weighted average contribution margin = Sales mix percentage * Contribution margin per unit

Sales mix percentage Contribution margin per unit weighted average contribution margin
Sporting goods 65% $                       30 $                                 20
Sports gear 35% $                       50 $                                 18
Weighted average contribution margin $                                 37

Total Break even sales in units = Fixed expenses / Contribution margin

Total Break even sales in units = $6,660,000 / 37 = 180,000 units

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ekkarill92 answered 2 years ago
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