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Rally Quadcopters plans to sell a standard quadcopter (toy drone) for $70 and a deluxe quadcopter for $90. Rally purchases the standard quadcopter for $50
Rally Quadcopters plans to sell a standard quadcopter (toy drone) for $70 and a deluxe quadcopter for $90. Rally purchases the standard quadcopter for $50 and the deluxe quadcopter for $70. Management expects to sell two deluxe quadcopters for every three standard quadcopters. The company's monthly fixed expenses are $16,000. How many of each type of quadcopter must Rally sell monthly to breakeven? To earn $12,000? First identify the formula to compute the sales in units at various levels of operating income using the contribution margin approach. (Abbreviations used: Avg. = average, and CM = contribution margin.) + ) + = Breakeven sales in units Sale price per unit Deduct: Variable expense per unit Contribution margin per unit Sales mix in units Contribution margin Weighted average contribution margin per unit Standard 70 (60) 10 3 30 Deluxe 01 5. Total
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