Calculato Sales Mix and Break-Even Sales Dragon Sports Inc. manufactures and set

ID: 2555122 • Letter: C

Question

Calculato Sales Mix and Break-Even Sales Dragon Sports Inc. manufactures and sets two products, baseball bats and baseball gloves. The fixed costs are $634,600, 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 Gloves a. Compute the break-even sales (units) for the overall enterprise product, E. $50 $40 130 80 units b. How many units of each product, baseball bats and baseball gloves, would be sold at the break-even point? Baseball bats Baseball gloves units units

Explanation / Answer

Solution

Product

Unit Selling Price

Unit variable cost

Sales mix

Bats

$ 50

$40

30% or 0.3

Gloves

$ 130

$80

70% or 0.7

Total

$ 180

$ 120

100% or 1.0

(a)Breakeven sales (units) for overall enterprise

= Total fixed expense / (Weighted Avg. selling price per unit - Weighted avg. variable expense per unit)

= $ 634,600 / [(0.3 X $ 50 + 0.7 X $ 130) - (0.3 X $ 40 + 0.7 X $ 80)

=$ 634,600 / $ 106 + $ 68

=$ 634,600 / $ 174

= 3,647 units

(b)

Bats = 3,647 X 0.3 = 1,094 units

Gloves = 3,647 X 0.7 = 2,553 units