Question

Sales Mix and Break-Even Sales Dragon Sports Inc, manufactures and sells two products, baseball bats and baseball gloves. The fixed costs are $496,000, and the sales mix is 30% bats and 70% gloves. The unit selling price and the unit variable cost for each product are as follows: Products Unit Selling Price Unit Variable Cost Bats $30 $40 100 Gloves 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

A) Weighted average selling price :

= { $ 40 X 30% } + { $ 100 X 70% } = $ 82

Weighted average variable costs :

= { $ 30 X 30%} + { $ 60 X 70% } = $ 51

Break even sales ( units) for overall enterprise products,E

= Total Fixed costs / [weighted average selling price - weighted average variable costs]

= $ 496,000 / [ $ 82 - $ 51] = 16,000 units.

B) Break even sales product wise:

Baseball bats = 16,000 X 30% = 4,800 units

Baseball gloves = 16,000 X 70 % = 11,200 units.

Verification of answer :

We, know in break even point of sales there is no profit and no loss. In below , it has been depicted by the above sales mix [ BEP SALES IN UNITS ] there will be no profit and loss of the manufacturer

Particulars	$	$
Revenue
Baseball bats [ 4,800 X 40]	$ 192,000
Baseball gloves [ 11,200 X 100]	$ 1,120,000
Total revenue		$ 1,312,000
Less :Expenses :
Variable cost for baseball bats [ 4,800 X $ 30]	$ 144,000
Variable cost for baseball gloves [ 11,200 X $ 60]	$ 672,000
Fixed costs	$ 496,000
Total expenses		$ 1,312,000
Net income or net loss		$ 0