Swanson company has two divisions; sporting goods and sports gear. the sales mix is 65% for sporting goods and 35% for sports gear. swanson incurs $3,330,000 in fixed costs. the contribution margin ratio for sporting goods is 30%, while for sports gear it is 50%. what will sales be for the sporting goods division at the break-even point?

The break-even point of sales for sporting goods division is $7,215,000.

Explanation:

fixed cost (sporting goods) = total fixed cost*sales percentage

                                             = $3,330,000*65%

                                              = $2,164,500

The fixed cost assigned to sporting goods is $2,164,500 it is calculated by multiplying total fixed cost $3,330,000 and sales percentage 65%. The fixed cost amount of $3,330,000 is a total fixed cost which is for both divisions, therefore, to calculate the total cost assigned to only sports division sales percentage is used.

break even point = fixed cost/contribution margin%

                             = $2,164,500/30%

                             = $7,215,000

Therefore, The break-even point of sales for sporting goods division is $7,215,000.

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