Question

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 $40.00 $46.00 14.40 18.40 moints eBook Biscayne's total fixed cost is $13,120 per month. Hint Print References 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. Complete this question by entering you answers in the tabs below. Required 1 Required 2 Required 3 Required 4 Required 5 Calculate Biscayne's break-even point if the product mix is 50/50. (Do not round intermediate calculations. Round your final answer to the nearest whole number.) Break-Even Point Rental Days < Required 2 Required 4 >

Answer 1

Weighted average contribution margin per unit

= Standard (40-14.40)*50/100 + Deluxe (46-18.40)*50/100

= 26.60

Breakeven point = Fixed cost/Weighted average contribution margin per unit

= 13,120/26.60

= 493

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