Monty Bikes (MB) manufactures and sells two models of bike, Ezee and Focus. Of MBs sales, 60% are for EZee and 40% for Focus. MB incurs $992,960 fixed costs, and pays taxes at a rate of 40%. Sheldon Wright, the owner of MB, anticipates that the labour and material costs will increase next year. He is considering upgrading the existing machine, which will cost $73,960. However, the variable costs will reduce from $510 to $400 for Ezee and from $930 to $800 for Focus.

Assuming the sales mix is constant, calculate the contribution margin for the composite. Contribution margin for the composite How many units of each model of bike should be sold to break-even? Ezee Focus Sales in unit to breakeven If MB's target after-tax income is $144,768, how many units of each model of bike should be sold? Ezee Focus Units to be sold In preparing a budget for next year, if MB proceeds with the new cost structure, calculate the contribution margin for the composite. What is the sales break-even in units for each model? Contribution margin for the composite What is the sales break-even in units for each model? Ezee Focus Sales in unit to breakeven $ With the new cost structure, if MB's target after-tax income is $144,768, how many units of each model of bike should be sold? (Round answers to 0 decimal places, e.g. 5,125.) Ezee Focus Units to be sold $ Based on the above information, does the degree of operating leverage increase or decrease after the change in the cost structure? (Round answers to 2 decimal places, e.g. 1.25.) Degree of operating leverage (Old) Degree of operating leverage (New) The degree of operating leverage after the change in the cost structure. Assuming the sales mix is constant, calculate the contribution margin for the composite. Contribution margin for the composite How many units of each model of bike should be sold to break-even? Ezee Focus Sales in unit to breakeven If MB's target after-tax income is $144,768, how many units of each model of bike should be sold? Ezee Focus Units to be sold In preparing a budget for next year, if MB proceeds with the new cost structure, calculate the contribution margin for the composite. What is the sales break-even in units for each model? Contribution margin for the composite What is the sales break-even in units for each model? Ezee Focus Sales in unit to breakeven $ With the new cost structure, if MB's target after-tax income is $144,768, how many units of each model of bike should be sold? (Round answers to 0 decimal places, e.g. 5,125.) Ezee Focus Units to be sold $ Based on the above information, does the degree of operating leverage increase or decrease after the change in the cost structure? (Round answers to 2 decimal places, e.g. 1.25.) Degree of operating leverage (Old) Degree of operating leverage (New) The degree of operating leverage after the change in the cost structure