EX 21-21 Sales mix and break-even sales

Dragon Sports Inc. manufactures and sells two products, baseball bats and baseball gloves. The fixed costs are $620,000, and the sales mix is 40% bats and 60% gloves. The unit selling price and the unit variable cost for each product are as follows:


Products Unit Selling Price Unit Variable Cost
Bats $ 90 $50
Gloves 105 65




a. Compute the break-even sales (units) for the overall product, E.
b. How many units of each product, baseball bats and baseball gloves, would be sold at the break-even point?


Answer:

a. Unit Selling Price of E = ($90 × 40%) + ($105 × 60%)
Unit Selling Price of E = $36 + $63 = $99
Unit Variable Cost of E = ($50 × 40%) + ($65 × 60%)
Unit Variable Cost of E = $20 + $39 = $59
Unit Contribution Margin of E = $99 – $59 = $40
Break-Even Sales (units) = Fixed Costs
Unit Contribution Margin
Break-Even Sales (units) = $620,000
$40
= 15,500 units






b.
6,200 units of baseball bats (15,500 units × 40%)
9,300 units of baseball gloves (15,500 units × 60%)