Kens Bicycle Shop sells mountain bikes. The shop sells medium quality bicycles and high quality bicycles.

Product Category: Sales Price Invoice Price Commission

High Quality $700 375 20% of Sales Price

Medium Quality $500 235 20% of Sales Price

The shop anticipates selling 500 bicycles, 300 of which will be medium quality. Annual fixed costs are $80,000.

How many bikes of each type must be sold to:

a) Break-even,

b) to earn an operating income of $50,000,

c) to earn a net income of $50,000 (the tax rate is 25%).