Basic Given: Volume 5000 units /month,

Price SR 50/ unit

Variable expense SR 30/unit

Fixed expenses: SR 80,000 / month

Contribution Income Statement For the Month of June Sales (500 bicycles) $ 250,000

Less: Variable expenses 150,000

Contribution margin 100,000 Less:

Fixed expenses 80,000

Net operating income $ 20,000 Racing Bicycle Company

a) What is RBCs Contribution Margin (CM) per unit?

b) What is RBCs CM Ratio?

c) What is RBCs Break-even point in Units?

d) What is RBCs Break-even point in Dollars?

e) What would RBCs Net Operating Income be if they sell 430 bicycles?

f) What is the profit impact if RBC can increase unit sales from 500 to 540 by increasing the monthly advertising budget by $10,000?

g) What is the profit impact if RBC can use higher quality raw materials, thus increasing variable costs per unit by $10, to generate an increase in unit sales from 500 to 580?

h) What is the profit impact if RBC cuts its selling price $20 per unit, increases its advertising budget by $15,000 per month, and increases sales from 500 to 650 units per month?

i) What is the profit impact if RBC pays a $15 sales commission per bike sold instead of paying salespersons flat salaries that currently total $6,000 per month, and increases unit sales from 500 to 575 bikes?

j) If RBC has an opportunity to sell 150 bikes to a wholesaler without disturbing sales to other customers or fixed expenses, what price would it quote to the wholesaler if it wants to increase profits by $3,000?