1.Tim-Buck-II rents jet skis at a beach resort. There are three models available to rent: Junior, Adult, and Expert. The rental price and variable costs for these three models are as follows: The current product mix is 5:4:1. The three models share total fixed costs of $114,750.

a.Calculate the sales price per composite unit.

b.What is the contribution margin per composite unit?

c.Calculate Tim-Buck-II's break-even point in both dollars and units.

d.Using an income statement format, prove that this is the break-even point.

2.Fire Company is a service firm with current service revenue of $900,000 and a 40\% contribution margin. Its fixed costs are $200,000. Ice Company has current sales of $420,000 and a 30\% contribution margin. Its fixed costs are $90,000.

a.What is the margin of safety for Fire and Ice?

b.Compare the margin of safety in dollars between the two companies. Which is stronger?

c.Compare the margin of safety in percentage between the two companies. Now which one is stronger?

d.Compute the degree of operating leverage for both companies. Which company will benefit most from a 10\% increase in sales? Explain why. Illustrate your findings in an Income Statement that is increased by 10\%.