Answer:
What is the shop’s sales mix?
PRODUCT 1 High 25%
PRODUCT 2 Medium 75%
Compute the unit contribution margin for each product type.
PRODUCT 1 High $ 0,840
PRODUCT 2 Medium $ 0,290
Compute the weighted-average unit contribution margin, assuming a constant sales mix
PRODUCT 1 High 25% weighted-average
$ 59,850 Contributing Margin
PRODUCT 2 Medium 75% weighted-average
$ 179,550 Contributing Margin
What is the shop’s break-even sales volume in dollars?
BREAK EVEN POINT
TOTAL Income Statement
$ 742,000 Total Net Sales
How many bicycles of each type must be sold to earn a target net income of $128,250?
PRODUCT 1 High 140
PRODUCT 2 Medium 420
560 Bicycles
Explanation:
PRODUCT 1 High
Quantity Unit TOTAL Income Statement
5 $ 2,000 $ 10,500 Total Net Sales
-$ 1,050 -$ 5,513 Variable Cost
-$ 0,110 -$ 0,578 Variable Cost
$ 0,840 $ 4,410 Contributing Margin
-$ 59,850 Anual Fixed Costs
-528% -$ 55,440 Segment Margin
PRODUCT 2 Medium
Quantity Unit TOTAL Income Statement
16 $ 1,100 $ 17,325 Total Net Sales
-$ 0,770 -$ 12,128 Variable Cost
-$ 0,040 -$ 0,630 Variable Cost
$ 0,290 $ 4,568 Contributing Margin
-$ 179,550 Anual Fixed Costs
-1010% -$ 174,983 Segment Margin
TOTAL
Quantity Unit TOTAL Income Statement
21 $ 1,325 $ 27,825 Total Net Sales
-$ 0,840 -$ 17,640 Variable Cost
-$ 0,058 -$ 1,208 Variable Cost
$ 0,428 $ 8,978 Contributing Margin
-$ 239,400 Anual Fixed Costs
-828% -$ 230,423 Segment Margin
BREAK EVEN POINT
Quantity Unit TOTAL Income Statement
560 $ 1,325 $ 742,000 Total Net Sales
-$ 0,840 -$ 470,400 Variable Cost
-$ 0,058 -$ 32,200 Variable Cost
$ 0,428 $ 239,400 Contributing Margin
-$ 239,400 Anual Fixed Costs
0% $ 0,000 Segment Margin
BREAK EVEN POINT
Quantity Unit TOTAL Income Statement
860 $ 1,325 $ 1.139,500 Total Net Sales
-$ 0,840 -$ 722,400 Variable Cost
-$ 0,058 -$ 49,450 Variable Cost
$ 0,428 $ 367,650 Contributing Margin
-$ 239,400 Anual Fixed Costs
11% $ 128,250 Segment Margin
