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Racing Wheels Bicycle Shop sells racing bicycles. For the purposes of a CVP analysis, the shop owner has divided sales into two categories, as follows:
Racing Wheels Bicycle Shop sells racing bicycles. For the purposes of a CVP analysis, the shop owner has divided sales into two categories, as follows: Product type Sales price Cost Sales commission Road bikes $2 000 $750 $50 Mountain bikes 1500 575 25 Three-quarters of the shop's sales are mountain bikes. The shop's annual fixed costs are $390 000. (In the following requirements, ignore income taxes.) Required: 1. Calculate the unit contribution margin for each product type. 2. What is the shop's sales mix? 3. Calculate the weighted average unit contribution margin, assuming a constant sales mix. 4. What is the shop's break-even sales revenue in dollars? Assume a constant sales mix. 5. How many bicycles of each type must be sold to earn a target net profit of $409 500? Assume a constant sales mix
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