Manzeck Bicycles International produces and sells three different types of mountain bikes. Information regarding the three models is shown below.
|
Pro |
Intermediate |
Standard |
Total |
|
|
Units sold |
5,000 |
10,000 |
25,000 |
40,000 |
|
Selling price |
$800 |
$500 |
$350 |
|
|
Variable cost |
$500 |
$300 |
$250 |
The company’s total fixed costs to produce the bicycles are $7,500,000.
(a) Determine the sales mix as a function of units sold for the three products.
(b) Determine the weighted average unit contribution margin.
(c) Determine the total number of units that the company must produce to break even.
(d) Determine the number of units of each model that the company must produce to break even.