Question

8. Sales Mix and Break-Even Sales

Dragon Sports Inc. manufactures and sells two products, baseball bats and baseball gloves. The fixed costs are $756,000, 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	$60		$50
Gloves	150		90

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). Breakeven sales (unit):

Contribution margin per unit of Bats = $60 - $50 = $10
Contribution margin per unit of Gloves = $150 - $90 = $60

Fixed cost = $756,000
Sales mix = 30% bats and 70% gloves
Units contribution margin of sales mix = ($10 * 30%) + ($60 * 70%) = $45

Total breakeven units = $756,000 / $45 = 16,800 units

b). Units of baseball bats = 16,800 * 30% = 5,040 units
Units of baseball gloves = 16,800 * 70% = 11,760 units