Question: tims bicycle shop sells 21speed bicycles for purposes of a...
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||Invoice Cost||Sales Commission|
Three-quarters of the shop’s sales are medium-quality bikes. The shop’s annual fixed expenses are $239,400. (In the following requirements, ignore income taxes.)
Compute the unit contribution margin for each product type.
What is the shop’s sales mix?
Compute the weighted-average unit contribution margin, assuming a constant sales mix.
What is the shop’s break-even sales volume in dollars? Assume a constant sales mix.
How many bicycles of each type must be sold to earn a target net income of $128,250? Assume a constant sales mix.