Question

Smartie's Scooters plans to sell a standard scooter for $90 and a chrome scooter for $120. Smartie's purchases the standard scooter for $45 and the chrome scooter for $30. Smartie's expects to sell one standard scooter for every three chrome scooters. Smartie's monthly fixed costs are $69,300. Read the requirements. Requirement 1. How many of each type of scooter must Smartie's Scooters sell each month to break even? Start by selecting the formula and entering the amounts to compute the breakeven point in units for the "package" of products—total scooters to be sold. (Enter a "0" for any zero balances. Enter currency amounts to the nearest cent. Abbreviation used: Weighted-avg. CM = weighted average contribution margin.) ( = Required sales in units ( )/ How many of each type of scooter must Smartie's Scooters sell each month to break even? Smartie's must sell standard scooters and chrome scooters to break even. Requirement 2. How many of each type of scooter must Smartie's Scooters sell each month to earn $126,000? Start by selecting the formula and entering the amounts to compute the targeted sales dollars required to earn for $126,000 for the "package" of products—total scooters to be sold. (Enter currency amounts to the nearest cent. Abbreviation used: Weighted-avg. CM = weighted average contribution margin.) ) / = Required sales in units ( ) / To reach the target operating income, Smartie's must sell standard scooters and chrome scooters. Requirement 3. Suppose Smartie's expectation to sell one standard scooter for every three chrome scooters was incorrect and for every four scooters sold two are standard scooters and two are chrome scooters. Will the breakeven point of total scooters increase or decrease? Why? (Calculation not required.) to profits. Each standard scooter contributes $ to profits while each chrome scooter contributes $ Therefore, the increase in sales of standard scooters and decrease in sales of chrome scooters would cause the weighted average contribution margin to and the breakeven point to

Answer 1