Racing Wheels Bicycle Shop sells racing bicycles. For the purposes of a cost volume profit analysis, the shop owner has divided sales into two categories, as follows
Three-quarters of the shop’s sales are mountain bikes. The shop’s annual fixed costs are $390
(In the following requirements, ignore income taxes.)
1. Calculate the unit contribution margin for each product type
2. What is the shop’s sales mix?
3. Calculate the weighted average unit contribution margin, assuming a constant sales mix.
4. What is the shop’s break-even sales volume in dollars? Assume a constant sales mix.
5. How many bicycles of each type must be sold to earn a target net profit of $409 500? Assume a constant sales mix