Robbie’s Rent-A-Ride rents two models of automobiles: the standard and the deluxe. Information follows:

Robbie’s total fixed cost is \($18,500\) per month.

Required:

1. Determine the contribution margin and contribution margin ratio per rental day for each model that Robbie’s offers.

2. Which model would Robbie’s prefer to rent? Explain your answer.

3. Calculate Robbie’s break-even point if the sales mix is 50/50.
4. Calculate the break-even point if Robbie’s sales mix changes so that the standard model is rented 75 percent of the time and the deluxe model is rented for only 25 percent.
5. Calculate the break-even point if Robbie’s sales mix changes so that the standard model is rented 25 percent of the time and the deluxe model is rented for 75 percent.

Transcribed Image Text:

Standard Deluxe Rental price per day Variable cost per day $25.00 $35.00 10.50 15.80