Reference no: EM132655061

Tim's bicycle shop sells 21-speed bicycles. for purpose of a cost-value-profits analysis, the shop owner has divided sales into two categories as follows

product type          sales price           invoice cost       sales commission

high quality              $500                  $275                    $25
medium quality          300                       135                     15

Three-quarters of the shop's sales are medium-quality bikes. The shop's annual fixed expenses are $65,000 (in the following requirements, ignore income taxes)

Problem 1: compute the unit contribution margin for each product type

Problem 2: what is the shops sales mix?

Problem 3: compute tje weighted-average unit contribution margin, assuming a constant sales mix?

Problem 4: what is the shops break even sales volume in dollars? assume a constant sales mix?

Problem 5: how many bicycles of each type must be sold to earn a target net income of $48,750 assume a constant sales mix