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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: Product Type
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: Product Type Sales Price High-quality $1,550 Medium-quality 770 Invoice Cost $690 470 Sales Commission $110 100 Three-quarters of the shop's sales are medium-quality bikes. The shop's annual fixed expenses are $209,250. (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 $101,250? Assume a constant sales mix. Complete this question by entering your answers in the tabs below. Required 1 Required 2 Required 3 Required 4 Required 5 Compute the unit contribution margin for each product type. Bicycle Type Unit Contribution Margin High-quality Medium-quality What is the shop's sales mix? Bicycle Type Sales Mix High-quality % Medium-quality % Compute the weighted-average unit contribution margin, assuming a constant sales mix. (Round your answer to 1 decimal place.) Weighted average unit contribution margin What is the shop's break-even sales volume in dollars? Assume a constant sales mix. Break-even sales volume How many bicycles of each type must be sold to earn a target net income of $101,250? Assume a constant sales mix. Number of Bicycles Bicycle Type High-quality Medium-quality
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