Tandem Bikes manufactures exercise bicycles built for two. It sells a cycle for $196(custom painted in your color choice). The costs associated with Tandem's productionare:Fixed costs (per year)Administrative labor $50000Variable Costs per bikeMaterials$30Mfg. LaborAssembly laborPacking materialPacking laborShipping costТОTALUtilities500024Plant Overhead65000$12000083ТOTALNote: this is $10000 per month.10$771. Find the monthly breakeven quantity using the above data.2. Express monthly breakevendollar sales (using the quantity calculated in #1).3. The cost of utilities doubles (annual fixed costs are now $125000 which is$10416.67 per month). What is the new monthly breakeven quantity?4. What is the Contribution Margin Ratio (CMR), using the costs used in #3?5. You believe you can sell only 80 bikes a month. Using the costs from #3, whatprice must be charged per bike to break even selling only 80 bikes per month?6. Using the original selling price of $196 and costs used in #3, compute a DOL fora 100 unit monthly level of production.

Given: The selling price of the cycle: $196 Total variable cost=$77 Total fixed cost=$120,000

Tandem Bikes manufactures exercise bicycles built for two. It sells a cycle for $196 (custom painted in your color choice). The costs associated with Tandem's production are: Fixed costs (per year) Administrative labor $50000 Variable Costs per bike $30 Materials Utilities 5000 Mfg. Labor Assembly labor Packing material Packing labor Shipping cost TОTAL 24 Plant Overhead ТOTAL 65000 $120000 8 3 2 Note: this is $10000 per month. 10 $77 1. Find the monthly breakeven quantity using the above data. 2. Express monthly breakeven in dollar sales (using the quantity calculated in #1). 3. The cost of utilities doubles (annual fixed costs are now $125000 which is $10416.67 per month). What is the new monthly breakeven quantity? 4. What is the Contribution Margin Ratio (CMR), using the costs used in #3? 5. You believe you can sell only 80 bikes a month. Using the costs from #3, what price must be charged per bike to break even selling only 80 bikes per month? 6. Using the original selling price of $196 and costs used in #3, compute a DOL for a 100 unit monthly level of production.

Tandem Bikes manufactures exercise bicycles built for two. It sells a cycle for $196 (custom painted in your color choice). The costs associated with Tandem's production are: Fixed costs (per year) Administrative labor $50000 Variable Costs per bike $30 Materials Utilities 5000 Mfg. Labor Assembly labor Packing material Packing labor Shipping cost TОTAL 24 Plant Overhead ТOTAL 65000 $120000 8 3 2 Note: this is $10000 per month. 10 $77 1. Find the monthly breakeven quantity using the above data. 2. Express monthly breakeven in dollar sales (using the quantity calculated in #1). 3. The cost of utilities doubles (annual fixed costs are now $125000 which is $10416.67 per month). What is the new monthly breakeven quantity? 4. What is the Contribution Margin Ratio (CMR), using the costs used in #3? 5. You believe you can sell only 80 bikes a month. Using the costs from #3, what price must be charged per bike to break even selling only 80 bikes per month? 6. Using the original selling price of $196 and costs used in #3, compute a DOL for a 100 unit monthly level of production.

Survey Of Economics

10th Edition

ISBN:9781337111522

Author:Tucker, Irvin B.

Publisher:Tucker, Irvin B.

Chapter6: Proudction Costs

Section: Chapter Questions

Problem 8SQP

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