ACCT-241 Lecture Notes - Lecture 5: Earnings Before Interest And Taxes, Contribution Margin, Income Statement
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1. Sales Mix and Break-Even Sales
Dragon Sports Inc. manufactures and sells two products, baseballbats and baseball gloves. The fixed costs are $836,000, and thesales mix is 30% bats and 70% gloves. The unit selling price andthe unit variable cost for each product are as follows:
Products | Unit Selling Price | Unit Variable Cost | ||
Bats | $70 | $50 | ||
Gloves | 180 | 110 |
a. Compute the break-even sales (units) forboth products combined.
units
b. How many units of each product, baseballbats and baseball gloves, would be sold at break-even point?
Baseball bats | units |
Baseball gloves | units |
2.
Break-Even Sales
Currently, the unit selling price of a product is $240, the unitvariable cost is $200, and the total fixed costs are $476,000. Aproposal is being evaluated to increase the unit selling price to$270.
a. Compute the current break-even sales(units).
units
b. Compute the anticipated break-even sales(units), assuming that the unit selling price is increased to theproposed $270, and all costs remain constant.
units