Tim’s Bike Shop sells 21-speed bikes. For purposes of cost-volume-profit analysis, the shop owner has divided sales into two categories, as follows:

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Product Type High-quality Medium-quality Sales Price Invoice Cost Sales Commission $600 320 $1,100 650 $60 40 Three-quarters of the shop's sales are medium-quality bikes. The shop's annual fixed expenses are $150,650. (In the following requirements, ignore income taxes.) Required: 1. Compute the unit contribution margin for each product type. 2. What is the shop's sales mix? 3. Compute 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 income of $98,250? Assume a constant sales mix. Product Type High-quality Medium-quality Sales Price Invoice Cost Sales Commission $600 320 $1,100 650 $60 40 Three-quarters of the shop's sales are medium-quality bikes. The shop's annual fixed expenses are $150,650. (In the following requirements, ignore income taxes.) Required: 1. Compute the unit contribution margin for each product type. 2. What is the shop's sales mix? 3. Compute 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 income of $98,250? Assume a constant sales mix.

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Step 1 Cost Volume Profit Analysis Break Even Analysis Cost volume profit analysis refers to the stu... View the full answer