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Tim's Bicycle Shop sells 21-speed bicycles. For purposes of a cost-volume-profit analysis, the shop owner has divided sales into two categories, as follows: Sales Price
Tim's Bicycle Shop sells 21-speed bicycles. For purposes of a cost-volume-profit analysis, the shop owner has divided sales into two categories, as follows: Sales Price Product Type High-quality Medium-quality Invoice Cost $750 Sales Commission $90 70 $1,400 800 470 Three-quarters of the shop's sales are medium-quality bikes. The shop's annual fixed expenses are $147,400. (In the following requirements, Ignore Income taxes.) Required: 1. Compute the unit contribution margin for each product type. 2. What is the shop's sales mix? 3. Compute the weighted-average unit contribution margin, assuming a constant sales mix. 4. What is the shop's break-even sales volume in dollars? Assume a constant sales mix. 5. How many bicycles of each type must be sold to earn a target net Income of $100,500? Assume a constant sales mix
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