Tandem Bikes manufactures exercise bicycles built for two.It sells a cycle for $196 (custom painted in your color choice).The costs associated with Tandem's production are:

Fixed costs (per year)Variable Costs per bike

Administrative labor$50000Materials$30

Utilities5000Mfg. Labor24

Plant Overhead65000Assembly labor8

TOTAL$120000Packing material3

Packing labor2

Note: this is $10000 per month.Shipping cost10

TOTAL$77

1. Find themonthlybreakeven quantity using the above data.

1. Expressmonthlybreakeven in dollar sales (using the quantity calculated in 1).

1. The cost of utilities doubles (annual fixed costs are now $125000 which is $10416.67 per month).What is the newmonthlybreakeven quantity?

1. What is the Contribution Margin Ratio (CMR), using the costs used in (3)?

1. You believe you can sell only 80 bikes a month.Using the costs from (3), what price must be charged per bike to break even selling only 80 bikes per month?

1. Using the costs used in (3), compute a DOL for a 100 unit monthlylevel of production.