Question Content Area

Multiple-Product Break-even, Break-Even Sales Revenue

Andrews Sporting Goods, Inc., produces and sells children's softball mitts: vinyl mitts and basic leather mitts. Last year, Andrews sold 24,000 vinyl mitts and 12,000 leather mitts. Information on the two products is as follows:

Line Item Description	Vinyl Mitts	Leather Mitts
Price	$10	$16
Variable cost per unit	6	10

Total fixed cost is $81,900.

Suppose that in the coming year, the company plans to produce an autographed mitt. The company estimates that 6,000 autographed mitts can be sold at a price of $23 and a variable cost per unit of $12. Total fixed cost must be increased by $27,300 (making total fixed cost $109,200). Assume that anticipated sales of the other products, as well as their prices and variable costs, remain the same.

1. What is the sales mix of vinyl mitts, leather mitts, and autographed mitts?

2:1:42:4:11:1:43:1:24:2:1

2. Compute the break-even quantity of each product. (Round break-even packages to four significant digits and break-even units to the nearest whole unit.)

Line Item Description	Answer
Break-Even Vinyl Mitts	fill in the blank 2 of 7 units
Break-Even Leather Mitts	fill in the blank 3 of 7 units
Break-Even Autographed Mitts	fill in the blank 4 of 7 units

3a. Prepare an income statement for Andrews Sporting Goods, Inc. for the coming year.

Line Item Description	Amount
Contribution marginOperating incomeSalesTotal fixed cost	$- Select -
Contribution marginOperating incomeTotal fixed costTotal variable cost	- Select -
Contribution marginOperating incomeSalesTotal fixed costTotal variable cost	$- Select -
Contribution marginOperating incomeSalesTotal fixed costTotal variable cost	- Select -
Contribution marginOperating incomeSalesTotal fixed costTotal variable cost	$- Select -

3b. What is the overall contribution margin ratio? Use the contribution margin ratio to compute overall break-even sales revenue. (Note: Round the contribution margin ratio to the nearest whole percent; round the break-even sales revenue to the nearest dollar.)

Line Item Description	Answer
Overall contribution margin ratio	fill in the blank 5 of 7 %
Overall break-even sales revenue	fill in the blank 6 of 7$

4. Compute the margin of safety for the coming year in sales dollars. fill in the blank 7 of 7$