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Brad?s Bicycle shop_CVP Analysis




Question;Exercise 7-30;Brad?s;Bicycle shop sells 21-speed bicycles. For the purposes of a cost-volume profit;analysis, the shop owner has divided sales into two categories, as follows;Product type Sales Price Invoice;cost Sales Commission;High quality $1,250 $540 $80;Medium;Quality 620 320 70;Sixty;percent of the shop?s sales are medium quality bikes. The shop?s annual fixed;expenses are $226,000.;Required;1. Compute the unit contribution margin;for each product type.;2. What is shop?s sales mix?;3. Compute the weighted average unit;contribution margin, assuming a constant sales mix.;4. What is the shop?s breakeven sales;volume in dollars? Assume a constant sales mix.;5. How many bicycles of each type must;be sold to earn a target income of $117,000? Assume a constant sales mix.


Paper#37276 | Written in 18-Jul-2015

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