A company that wants to "empower athletes everywhere," started out to produce a superior T-shirt that would help regulate an athlete's body temperature during workouts. The company has expanded its product line well beyond T-shirts, now providing athletes with a wide range of workout wear, footwear, and accessories. The following chart show the company's sales mix for 2010 and 2011.

Required
a. Discuss the effect that the change in sales mix might have had on Under Armour€™s breakeven point and operating income.
b. Assume that apparel has a higher contribution margin ratio than accessories. Was the decrease in the percentage of sales provided by apparel a desirable outcome in 2011?
c. Within the apparel line, do you think all products have the same contribution margin?
Why or whynot?

Transcribed Image Text:

Apparel Footwear Accessories 2010 83% 12% 4% 2011 78% 13% 9%