Question

Biscayne's Rant-A-Ride rents two models of automobles: the standard and the deluxe. Intonmation tollows: Stardard Deluxe Rental price per day Varlabla coat par day 2520 34 80 Biscaync s total tocd cost is S33,234 pcr month. Required: 1. Uetermine the contributon margin per remal day and contribution margin ratotorcach model that 비scayne's oners (Round your "Unit Contribution Margin, answers to 2 decimal places.) Deluxe Unit Contribution Margin Conbibution Mergin Raio per Day per Day 2. which model would 3iscayne's preter to rent? O Deluxe Model Standard Mode 3. Colcule Biscnyne's brenk-even poinm If the product mix Is 5050. (Do not round intermediate calculations. Round your final answer to the nearost whole number.) Rental Days 4. Colculate the break-even point it Biscayne's product mix changes so thatthe stondlard model is rented s pe cent of the zime ond the deuxe model is rented for only 25 percen (Do not round intermediate calculations. Round your tinal answer to the nearest whole number.) Rentel Daye 5. Calculate he break-eve pot if Bscayie's product mx chheniges so thal e rd model is rented 25 percent of the tme and the deluxe model is renied for 75 pecet. (Do not round intermediate calculations. Round your tinal answer to the nearest whole number.) Revilal Days

Answer 1

1)

Particulars	Standard	Deluxe
Rental Price Per Day (A)	$70	$87
Less :Variable Cost Per Day (B)	($25.20)	($34.80)
Unit Contribution Par Day (C)=(A-B)	$44.80	$52.2
Contribution Margin Ratio (C/A)*100	64%	60%

2) I Suggest to Biscayne's Prefer Standard Model to Rent, because Contribution Margin Ratio of Standard Model High more than Deluxe Model.

3) Weigthed Unit Contribution Margin (If Product mix is 50/50)

= ($44.80 * 50%) + ($52.20 * 50%)

= $22.4 + $26.1

= $48.5

Break even Point = Fixed Cost / Weigthed Unit Contribution Margin

= $33294 / $48.5

= 686.47 or 686 Rental Days

4) Weigthed Unit Contribution Margin (If Product mix is 75/25)

= ($44.80 * 75%) + ($52.20 * 25%)

= $33.6 + $13.05

= $46.65

Break even Point = Fixed Cost / Weigthed Unit Contribution Margin

= $33294 / $46.65

= 713.70 or 714 Rental Days

5) Weigthed Unit Contribution Margin (If Product mix is 25/75)

= ($44.80 * 25%) + ($52.20 * 75%)

= $11.2 + $39.15

= $50.35

Break even Point = Fixed Cost / Weigthed Unit Contribution Margin

= $33294 / $50.35

= 661.25 or 661 Rental Days