Question: Exercise 6-6 Examining Cost Behaviour and Contribution Margin (LO1 - CC1, 3; LO2 - CC7; LO3 - CC12) Bikes Manufacturing produces and sells childrens bikes

Exercise 6-6 Examining Cost Behaviour and Contribution Margin (LO1 - CC1, 3; LO2 - CC7; LO3 - CC12)

Bikes Manufacturing produces and sells childrens bikes at an average price of $140. Its costs are as follows: direct materials, $13; direct labour, $9; variable overhead, $2; sales commission, 5% of price. Its fixed monthly costs are $48,000.

Required: 1. Using the above cost data, set up a monthly cost equation.

Y= ______ + _______ X

2. What is the companys contribution margin percentage? (Round your answer to 2 decimal places.)

Contribution margin ___________ %

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