Under Armour, 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 shows the company’s sales  mix for 2010, 2015 and 2017.

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 2017?

c. Within the apparel line, do you think all products have the same contribution margin per unit? Why  or why not?

Transcribed Image Text:

2010 2015 2017 Apparel 83% 73% 69% Footwear 12% 18% 22% Accessories 4% 9% 9%