Sales mix: It refers to the relative distribution of the total sales among the number of products sold by a company. In other words, it is expressed as a percentage of units sold for each product with respect to the total units sold for all the products. Break-even Point: It refers to a point in the level of operations at which a company experiences its revenues generated is equal to its costs incurred. Thus, when a company reaches at its break-even point, it reports neither an income nor a loss from operations. The formula to calculate the break-even point in sales units is as follows: Break-even point in Sales ( units ) = Fixed Costs Contribution Margin per unit To determine: the break-even point in sales units for the overall Product E.

Question

Sales Mix and Break-Even Sales Home Run Sports Inc. manufactures and sells two products, baseball bats and baseball gloves. The fixed costs are $176,400, and the sales mix is 80% bats and 20% gloves. The unit selling price and the unit variable cost for each product are as follows: Products Unit Selling Price Unit Variable Cost Bats $50 $40 Gloves 130 80 a. Compute the break-even sales (units) for the overall 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

Question

Chapter 21, Problem 21.21EX

a.

To determine

Sales mix: It refers to the relative distribution of the total sales among the number of products sold by a company. In other words, it is expressed as a percentage of units sold for each product with respect to the total units sold for all the products.

Break-even Point: It refers to a point in the level of operations at which a company experiences its revenues generated is equal to its costs incurred. Thus, when a company reaches at its break-even point, it reports neither an income nor a loss from operations. The formula to calculate the break-even point in sales units is as follows:

Break-even point in Sales(units) =Fixed CostsContribution Margin per unit

To determine: the break-even point in sales units for the overall Product E.

b.

To determine

the break-even sales (units) for Product-Bats and Product-Gloves.

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