Question

Chapter 6 Assignment i Saved 12. Biscayne's Rent-A-Ride rents two models of automobiles: the standard and the deluxe. Information follows: 10 Rental price per day Variable cost per day Standard $60.00 24.00 Deluxe $68.00 30.60 points Biscayne's total fixed cost is $20,454 per month. eBook Hint Required: 1. Determine the contribution margin per rental day and contribution margin ratio for each model that Biscayne's offers. 2. Which model would Biscayne's prefer to rent? 3. Calculate Biscayne's break-even point if the product mix is 50/50. 4. Calculate the break-even point if Biscayne's product mix changes so that the standard model is rented 75 percent of the time and the deluxe model is rented for only 25 percent. 5. Calculate the break-even point if Biscayne's product mix changes so that the standard model is rented 25 percent of the time and the deluxe model is rented for 75 percent. Print References Complete this question by entering your answers in the tabs below. Required 1 Required 2 Required 3 Required 4 Required 5 Determine the contribution margin per rental day and contribution margin ratio for each model that Biscayne's offers. (Round your "Unit Contribution Margin" answers to 2 decimal places.) Standard per Day Deluxe per Day Unit Contribution Margin Contribution Margin Ratio Required 1 Required 2 >

Answer 1

Please find below table useful to compute desired results: -

68 А B 1 Standard Deluxe 2 Rental Price per day 60 3 Variable cost per day 30.6 4 Total Fixed Cost 16125 5 6 Contribution Margin per rental day =B2-B3 =C2-C3 7 Contribution margin ratio =B6/B2 =C6/C2 8 Biscayne would prefer to rent Deluxe model because of higher Contribution margin 9 Product Mix 50/50 10 Weighted Contribution margin ratio 1=B7*50%+C7*50% 11 Break Even point =B4/B10 12 13 Product mix 14 Wieghted Contribution margin ratio 15 Break even point 75/25 1=B7*75%+C7*25% =B4/B14 17 Product Mix 18 Weighted Contribution Margin Ratio 19 Break Even Point 25/75 =B7*25%+C7*75% =B4/B18

End results would be as follows: -

A в с D E 1 Standard Deluxe 2 Rental Price per day 60.00 68.00 3 Variable cost per day 24.00 30.60 4 Total Fixed Cost 16.125.00 5 6 Contribution Margin per rental day 36.00 37.40 7 Contribution margin ratio 60.00% 55.00% 8 Biscayne would prefer to rent Deluxe model because of higher Contribution margin 9 Product Mix 50/50 10 Weighted Contribution margin ratio 57.50% 11 Break Even point 28,043.48 12 75/25 58.75% 27,446.81 13 Product mix 14 Wieghted Contribution margin ratio 15 Break even point 16 17 Product Mix 18 Weighted Contribution Margin Ratio 19 Break Even Point 25/75 56.25% 28,666.67