Data related to the expected sales of mountain bikes and road bikes for Cycle Sports Inc, for the current year, which is typical of recent years, are as follows:

Products......Unit Selling Price....Unit Variable Cost....Sales Mix

Mountain bikes$800$47560%

Road bikes 700 32540%

The estimated fixed costs for the current year are $724,500.

Instructions

1. Determine the estimated units of sales of the overall (total) product necessary to reach the break-even point for the current year.

2. Based on the break-even sales (units) in part (1), determine the unit sales of both mountain bikes and road bikes for the current year.

3. Assume that the sales mix was 50% mountain bikes and 50% road bikes. Compare the break-even point with that in part (1). Why is it so different?