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Solution to lecture-4 illustration questions

Solution to lecture-4 illustration questions - High-quality...

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SOLUTION TO LECTURE-4 ILLUSTRATION QUESTIONS 6-25 1. Variable maintenance cost per tour mile = (18,750r-16,500r) / (30,000 miles – 12,000 miles) = .125r r denotes the real, Brazil’s national currency. Total maintenance cost at 12,000 miles ...................... 16,500r Variable maintenance cost at 12,000 miles (.125r × 12,000) ..................................................................... 1,500 r Fixed maintenance cost per month ............................. 15,000 r 2. Cost formula: Total maintenance cost per month = 15,000r + .125rX , where X denotes tour miles traveled during the month. 3. Cost prediction at the 34,000-mile activity level: Maintenance cost = 15,000r + (.125r)(34,000) = 19,250r 7-30 1. Bicycle Type Sales Price Unit Variable Cost Unit Contribution Margin High-quality \$1,000 \$600 (\$550 + \$50) \$400

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Medium- quality 600 300 (\$270 + \$30) 300 2 . Sales mix:
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Unformatted text preview: High-quality bicycles. .................................................... 30% Medium-quality bicycles. ............................................... 70% 3 . Weighted-average unit contribution margin = (\$400 × 30%) + (\$300 70%) = \$330 4 . Bicycle Type Break-Even Sales Volume Sales Price Sales Revenue High-quality bicycles 135 (450 .30) \$1,000 \$135,000 Medium-quality bicycles 315 (450 .70) 600 189,000 Total \$324,000 5. Target net income: This means that the shop will need to sell the following volume of each type of bicycle to earn the target net income: High-quality. ................................................................................. 225 (750 × .30) Medium-quality. ............................................................................ 525 (750 × .70)...
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