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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 Commission
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 Commission $100 Sales Price Invoice Product Type High-quality $1,450 $640 Medium-quality 720 420 90 Three-quarters of the shop's sales are medium-quality bikes. The shop's annual fixed expenses are $201,000. (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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