Question: tims bicycle shop sells 21speed bicycles for purposes of a...
Question details
Tim’s Bicycle Shop sells 21speed bicycles. For purposes of a costvolumeprofit analysis, the shop owner has divided sales into two categories, as follows:
Product Type  Sales Price  Invoice Cost  Sales Commission  
Highquality  $  2,000  $  1,050  $  110  
Mediumquality  1,100  770  40  
Threequarters of the shop’s sales are mediumquality bikes. The shop’s annual fixed expenses are $239,400. (In the following requirements, ignore income taxes.)
Required:

Compute the unit contribution margin for each product type.

What is the shop’s sales mix?

Compute the weightedaverage unit contribution margin, assuming a constant sales mix.

What is the shop’s breakeven 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.