Question

not sure why this isnt working for me. my ratios are correct. help.

pter 06 Pre-Built Problems Saved 0. Biscayne's Rent-A-Ride rents two models of automobiles: the standard and the deluxe. Information follows: Rental price per day Variable cost per day Standard Deluxe $49.00 $46.00 14.40 18.40 Biscayne's total fixed cost is $13,120 per month 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 a 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 a the deluxe model is rented for 75 percent. Print eferences 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.) Unit Contribution Margin Standard 25.60 per Day 64% Deluxe 27.60 per Day 60 Contribution Margin Ratio 60% Required 2 >

Answer 1

Weighted average contribution margin = 25.6*50% + 27.6*50%

= 26.6 per day

Hence, Break even point = Fixed costs/Weighted average contribution margin per day

= 13120/26.6

= 493.23 days

i.e. 493 days

4.Weighted average contribution margin = 25.6*75% + 27.6*25%

= 26.1 per day

Hence, Break even point = Fixed costs/Weighted average contribution margin per day

= 13120/26.1

= 502.68 days

i.e. 503 days

5. Weighted average contribution margin = 25.6*25% + 27.6*75%

= 27.1 per day

Hence, Break even point = Fixed costs/Weighted average contribution margin per day

= 13120/27.1

= 484.13 days

i.e. 484 days