Assume that a music store sells three types of electric guitars: Telecaster, Stratocaster, and Jazzmaster. The music
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Question:
Assume that a music store sells three types of electric guitars: Telecaster, Stratocaster, and Jazzmaster. The music store has monthly fixed costs of $222,500 and sells 2 Telecasters for every Stratocaster, and 4 Stratocasters for every Jazzmaster. The product information is presented below: | ||||||
Telecaster | Stratocaster | Jazzmaster | ||||
Unit Selling Price | 1,100 | 1,200 | 1,525 | |||
Unit Variable Cost | (725) | (815) | (1,275) | |||
Required | ||||||
1. Determine the contribution margin for each electric guitar. | ||||||
2. Determine the average contribution margin for the sales mix. | ||||||
3. Determine the number of Stratocasters sold at the monthly break-even point. |
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