Data related to the expected sales of mountain bikes and road bikes for Cycle Sports Inc, for the current year, which is typical of recent years, are as follows: Products

Accounting Jan 22, 2021

Data related to the expected sales of mountain bikes and road bikes for Cycle Sports Inc, for the current year, which is typical of recent years, are as follows:

Products......Unit Selling Price....Unit Variable Cost....Sales Mix

Mountain bikes$800$47560%

Road bikes 700 32540%

The estimated fixed costs for the current year are $724,500.

Instructions

1. Determine the estimated units of sales of the overall (total) product necessary to reach the break-even point for the current year.

2. Based on the break-even sales (units) in part (1), determine the unit sales of both mountain bikes and road bikes for the current year.

3. Assume that the sales mix was 50% mountain bikes and 50% road bikes. Compare the break-even point with that in part (1). Why is it so different?

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