Sales Mix and Break-Even Sales
Dragon Sports Inc. manufactures and sells two products, baseball bats and baseball gloves. The fixed costs are $471,200, 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:
Products | Unit Selling Price | Unit Variable Cost | ||
Bats | $80 | $60 | ||
Gloves | 200 | 120 |
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:-
Contribution per unit = sales - variable cost
Bats=80*70% -60*30% =38
Gloves = 200*70% - 120*30% =104
Contribution = 104 - 38 =66
Break even sales = fixed cost / contribution
=471200/66 = 7139.3939
b)sold at break even point
Baseball bats = 7139.39*70% = 4997.57
Gloves =7139.39*30% = 2141.817
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