Question

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 enterprise product, E.

Answer 1

$15,500 units

Explanation:

For the computation of break-even sales (units) for the overall enterprise product, E first we need to follow some steps which is shown below:-

Contribution margin = (Selling price - Variable costs)

For Bats $90 - $50

= $40

For Gloves = $105 - $65

= $40

Overall contribution margin = (40 × 40%) + (40 × 60%)

= $40

a.Break-even point = Fixed costs ÷ Contribution margin

= $620,000 ÷ 40

= $15,500 units