Business, 07.03.2020 03:38, smariedegray

Tim's Bicycle Shop sells 21-speed bicycles. For purposes of a cost-volume-profit analysis, the shop owner has divided sales into two categories, as follows:

Product Type Sales Price Invoice Cost Sales Commission
High-quality $500 $275 $25
Medium-quality 300 135 15
Three-quarters of the shop's sales are medium-quality bikes. The shop's annual fixed expenses are $65,000. (In the following requirements, ignore income taxes.)

Required

1. Compute the unit contribution margin for each product type

2. What is the shop's sales mix?

3. Compute the weighted-average unit contribution margin, assuming a constant sales mix.

4. What is the shop's break-even sales volume in dollars? Assume a constant sales mix.

5. How many bicycles of each type must be sold to earn a target net income of $48,750? Assume a constant sales mix. (should have a seperate answer for high quality and medium quality)

Compute the weighted-average unit contribution margin, assuming a constant sales mix. (Round your answer to 2 decimal places.)

Answers: 2

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Tim's Bicycle Shop sells 21-speed bicycles. For purposes of a cost-volume-profit analysis, the shop...