Exercise 7-29 retail; cvp analysis with multiple products (lo 7-1, 7-2, 7-5) tim’s 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 $ 2,000 $ 1,050 $ 110 medium-quality 1,100 770 40 three-quarters of the shop’s sales are medium-quality bikes. the shop’s annual fixed expenses are $239,400. (in the following requirements, ignore income taxes.) required: compute the unit contribution margin for each product type. what is the shop’s sales mix? compute the weighted-average unit contribution margin, assuming a constant sales mix. what is the shop’s break-even sales volume in dollars? assume a constant sales mix. how many bicycles of each type must be sold to earn a target net income of $128,250? assume a constant sales mix.

What is the shop’s sales mix?  

PRODUCT 1 High25%  

PRODUCT 2 Medium75%  

Compute the unit contribution margin for each product type.    

PRODUCT 1 High$ 0,840  

PRODUCT 2 Medium$ 0,290  

Compute the weighted-average unit contribution margin, assuming a constant sales mix  

PRODUCT 1 High25%          weighted-average

                         $ 59,850Contributing Margin

PRODUCT 2 Medium75%          weighted-average

                               $ 179,550Contributing Margin

What is the shop’s break-even sales volume in dollars?  

BREAK EVEN POINT  

TOTALIncome Statement

$ 742,000Total Net Sales

How many bicycles of each type must be sold to earn a target net income of $128,250?  

PRODUCT 1 High      140  

PRODUCT 2 Medium  420  

                                   560  Bicycles

Explanation:

PRODUCT 1 High    

QuantityUnitTOTALIncome Statement

5  $ 2,000$ 10,500Total Net Sales

-$ 1,050-$ 5,513Variable Cost

-$ 0,110-$ 0,578Variable Cost

$ 0,840$ 4,410Contributing Margin

 -$ 59,850Anual Fixed Costs

-528%-$ 55,440Segment Margin

PRODUCT 2 Medium    

QuantityUnitTOTALIncome Statement

16  $ 1,100$ 17,325Total Net Sales

-$ 0,770-$ 12,128Variable Cost

-$ 0,040-$ 0,630Variable Cost

$ 0,290$ 4,568Contributing Margin

 -$ 179,550Anual Fixed Costs

-1010%-$ 174,983Segment Margin

TOTAL    

QuantityUnitTOTALIncome Statement

21  $ 1,325$ 27,825Total Net Sales

-$ 0,840-$ 17,640Variable Cost

-$ 0,058-$ 1,208Variable Cost

$ 0,428$ 8,978Contributing Margin

 -$ 239,400Anual Fixed Costs

-828%-$ 230,423Segment Margin

BREAK EVEN POINT    

QuantityUnitTOTALIncome Statement

560  $ 1,325$ 742,000Total Net Sales

-$ 0,840-$ 470,400Variable Cost

-$ 0,058-$ 32,200Variable Cost

$ 0,428$ 239,400Contributing Margin

 -$ 239,400Anual Fixed Costs

0%$ 0,000Segment Margin

BREAK EVEN POINT    

QuantityUnitTOTALIncome Statement

860  $ 1,325$ 1.139,500Total Net Sales

-$ 0,840-$ 722,400Variable Cost

-$ 0,058-$ 49,450 Variable Cost

$ 0,428$ 367,650Contributing Margin

 -$ 239,400Anual Fixed Costs

11%$ 128,250Segment Margin

urban company reports the following information regarding its production cost: units produced 37,000 units direct labor $ 30 per unit direct materials $ 35 per unit variable overhead $ 237,000 in total fixed overhead $ 127,000 in total

the law, public safety, corrections, and security cluster prepares people for careers in planning, managing, and providing legal, public safety, protective services and homeland security, including professional and technical support services.