#$3$ Multiple Product CVP

Ken$$s Bicycle Shop sells mountain bikes. For purposes of a cost$-$volume$-$profit analysis, the shop owner has divided sales into two categories, as follows:

High Quality Medium Quality

Total

Price per unit $$750$ $$500$

VC per unit $$375$ $$300$

CM per unit $$375$ $$200$

Total units sold $250250500$

Sales Revenue $$187,500$ $$125,000$ $$312,500$

Total VC $$93,750$ $$75,000$ $$168,750$

Total CM $$93,750$ $$50,000$ $$143,750$

Common Fixed Cost $$120,000$

Pre$-$Tax Profit $$23,750$

Questions $($all questions are independent and assume the same sales mix as last year unless otherwise noted$)$:

a$.$ What is the shop$$s sales mix?

Sales Mix in Dollars:

Sales Mix in Units:

b$.$ What is the average CM per unit? The average CM $\%?$

CM per unit:

$168,750/500=337\mathrm{.}5$

CM Ratio:

$168,750/$

c$.$ What is the shop$$s breakeven sales volume in units?

Answer is $480$

$120,000+23,750/500$

d$.$ At the breakeven point, how many high$-$quality bikes must be sold?

e$.$ At the breakeven point, how much revenue will medium$-$quality bikes generate?

f$.$ How many medium$-$quality bikes must be sold to earn net income of $$60,000($assuming the tax rate is $40\%)?$