In: Accounting
Biscayne’s Rent-A-Ride rents two models of automobiles: the
standard and the deluxe. Information follows:
Standard | Deluxe | ||||
Rental price per day | $ | 40.00 | $ | 46.00 | |
Variable cost per day | 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.
(Round your "Unit Contribution
Margin" answers to 2 decimal
places.)
2. Which model would Biscayne’s prefer to
rent?
Deluxe Model | |
Standard Model |
3. 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.)
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.
(Do not round intermediate calculations.
Round your final answer
to the nearest whole
number.)
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.
(Do not round intermediate calculations.
Round your final answer to the
nearest whole number.)