The shops annual fixed expenses are 148500 in the

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Unformatted text preview: MMISSION $50 30 Seventy percent of the shop’s sales are medium-quality bikes. The shop’s annual fixed expenses are $148,500. (In the following requirements, ignore income taxes.) Question: 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 $99,000? Assume a constant sales mix. FC $148,500 MQ 70% HQ 30% 1. CM HQ= 1,000 - 550 - 50 = $400 CM MQ= 600 - 270 - 30 = $300 2. Sales Mix MQ 70% HQ 30% 3. Weighted-average UCM = (70%x 300) + (30% x 400) = $330 4. Break-even= 148,500: 330 = 450 units MQ= 315 units HQ=135 units 5. Target = (148,500 + 99,000): 330 = 750 units MQ=525 units HQ=225 units 3...
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This document was uploaded on 02/03/2014.

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