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Leisure Ltd produces two types of bicycles, the leisure bicycle and the mountain bicycle. The leisure bike is a popular family bicycle, while the mountain
Leisure Ltd produces two types of bicycles, the leisure bicycle and the mountain bicycle. The leisure bike is a popular family bicycle, while the mountain bike is an allterrain bicycle popular with sportspeople, Data relating to the two bicycles is as follows:
Selling price per unit Variable
R
Leisure bicycle
manufacturing cost per unit R
Mountain bicycle
Required:
Sales representatives receive a commission of on the mountain bike and a commission on the leisure bike. Annual fixed costs total R The company has recently embarked on a marketing campaign of 'carfree living', which has seen the sale of its leisure bikes increase dramatically, with of the company's sales coming from the leisure bicycle.
Calculate the contribution per unit for each bicycle.
Assuming a constant sales mix, calculate:
I The weighted average contribution per unit il The weighted average contribution margin ratio ill The breakeven point in rands
iv The number of leisure and mountain bikes that must be sold in order to generate an aftertarget profit of Rassume a tax rate of
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