Exercise 7-29 Retail; CVP Analysis with Multiple Products (LO 7-1, 7-2, 7-5) Tim's Bicycle Shop sells...

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Exercise 7-29 Retail; CVP Analysis with Multiple Products (LO 7-1, 7-2, 7-5) 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 High-quality Medium-quality Sales Price Invoice Cost Sales Commission $500 $275 300 135 $25 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. Page 309 Exercise 7-29 Retail; CVP Analysis with Multiple Products (LO 7-1, 7-2, 7-5) 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 High-quality Medium-quality Sales Price Invoice Cost Sales Commission $500 $275 300 135 $25 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. Page 309