Biscayne\'s Rent-A-Ride rents two models of automobiles: the standard and the de

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 $30.00 $38.00 10.50 15.20 Biscayne's total fixed cost is $18,500 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.) Standard Deluxe Unit Contribution Margin Contribution Margin Ratio per Day per Day 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.) k-Even Point Rental Days 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.) k-Even Point Rental Days

Explanation / Answer

Dear Student Thank you for using Chegg Please find below the answer    Statementshowing Computations Paticulars Standard Deluxe Total Rental price per day                           30.00                           38.00 Less Variable Expenses per day                         (10.50)                         (15.20) Contribution Margin per day                           19.50                           22.80 Contribution margin Ratio = Contribution/Rental 65.00% 60.00% 2) Deluxe since it has higher contribution margin per day assuming all other factors are constant 3) Contribution Margin per day                           19.50                           22.80 Sales Mix                             0.50                             0.50 Weighted contribution                             9.75                           11.40                            21.15 Fixed costs                    18,500.00 BEP In units = 18500 / 21.15                         437.35                         437.35                          874.70 4) Contribution Margin per day                           19.50                           22.80 Sales Mix                             0.75                             0.25 Weighted contribution                           14.63                             5.70                            20.33 Fixed costs                    18,500.00 BEP In units = 18500 / 20.33                         682.66                         227.55                          910.21 5) Contribution Margin per day                           19.50                           22.80 Sales Mix                             0.25                             0.75 Weighted contribution                             4.88                           17.10                            21.98 Fixed costs                    18,500.00 BEP In units = 18500 / 21.98                         210.47                         631.40                          841.87

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