Exercise 7-29 Retail; CVP Analysis with Multiple Products.

Tims Bicycle Shop sells 21-speed bicycles. For 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	$	500		$	275		$	25
Medium-quality		300			135			15

Three-quarters of the shops sales are medium-quality bikes. The shops annual fixed expenses are $65,000. (In the following requirements, ignore income taxes.) Required: 1. Compute the unit contribution margin for each product type. 2. What is the shops sales mix? 3. Compute the weighted-average unit contribution margin, assuming a constant sales mix. 4. What is the shops 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 $48,750? Assume a constant sales mix.