Reference no: EM132962079

Racing Wheels Bicycle Shop sells racing bicycles. For the purposes of a CVP analysis, the shop owner has divided sales into two categories, as follows:

Product type           Road bikes                Mountain bikes

Sales prlce                $2000                         1500

Cost                          $750                         575

Sales commlsslon         $50                           25

Three-quarters ofthe shop's sales are mountain bikes. The shop's annual fixed costs are 390 000. (In the following requirements, ignore income taxes.)

Problem 1. Calculate the unit contribution margin for each product type.

Problem 2. What is the shop's sales mix?

Problem 3. Calculate the weighted average unit contribution margin, assuming a constant sales mix.

Problem 4. What is the shop's break-even sales revenue in dollars? Assume a constant sales mix.

Problem 5. How many bicycles of each type must be sold to earn a target net profit of $409 500? Assume a constant sales mix.