Question

Dragon Sports Inc. manufactures and sells two products, baseball bats and baseball gloves. The fixed costs are $448,000, 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 $40 $30 Gloves 100 60 a. Compute the break-even sales (units) for both products combined. fill in the blank 1 units b. How many units of each product, baseball bats and baseball gloves, would be sold at break-even point? Baseball bats fill in the blank 2 units Baseball gloves fill in the blank 3 units

Answer 1

Dragon Sports Inc. needs to sell a total of 16,000 units at the break-even point, which includes 6,400 baseball bats and 9,600 baseball gloves, considering their sales mix and respective unit costs.

Step-by-step explanation:

Break-Even Analysis for Dragon Sports Inc.

To compute the break-even sales in units for Dragon Sports Inc., we use the formula for break-even point in units, which is Total Fixed Costs divided by Unit Contribution Margin. The contribution margin for each product is calculated by subtracting the Unit Variable Cost from the Unit Selling Price. With a sales mix of 40% bats and 60% gloves, we first find the weighted average contribution margin per unit and then calculate the total break-even units.

• Bats Contribution Margin: $40 (Selling Price) - $30 (Variable Cost) = $10
• Gloves Contribution Margin: $100 (Selling Price) - $60 (Variable Cost) = $40
• Weighted Average Contribution Margin: ($10 * 40%) + ($40 * 60%) = $4 + $24 = $28
• Total Break-Even Units: $448,000 (Fixed Costs) ÷ $28 (Weighted Average CM) = 16,000 units

To determine the number of baseball bats and baseball gloves sold at break-even:

• Baseball Bats: 16,000 units * 40% = 6,400 units
• Baseball Gloves: 16,000 units * 60% = 9,600 units

Answer 2

Answer: a)the break-even sales (units) for both products combined= 16,000 units

b)break-even point for Baseball bats= 6, 400units

break-even point for Baseball gloves= 9,600units

Step-by-step explanation:

a. Break-even sales (units) is given as:-

Contribution margin=Sales - Variable costs

Contribution margin for Bats = $40 - $30

= $10

Contribution margin for Gloves = $100 - $60

= $40

Weighted average Contribution margin = ($10 × 40%) + ($40 × 60%)

= $4+ $24

= $28

Break-even = Fixed cost ÷ Contribution margin

= $448,000 ÷ $28

= 16,000 units

b. The computation of units of each product is shown below:-

Baseball bats = 16,000 units × 40%= 6, 400units

Baseball gloves = 16,000units × 60%=9,600units