Biscaynes Rent-A-Ride rents two models of automobiles: the standard and the deluxe. Information follows: ...
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Accounting
Biscaynes Rent-A-Ride rents two models of automobiles: the standard and the deluxe. Information follows:
| Standard | Deluxe | ||||
| Rental price per day | $ | 58.00 | $ | 66.00 | |
| Variable cost per day | 17.40 | 23.10 | |||
Biscaynes total fixed cost is $19,651 per month.
Required:
1. Determine the contribution margin per rental day and contribution margin ratio for each model that Biscaynes offers.
2. Which model would Biscaynes prefer to rent?
3. Calculate Biscaynes break-even point if the product mix is 50/50.
4. Calculate the break-even point if Biscaynes 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 Biscaynes product mix changes so that the standard model is rented 25 percent of the time and the deluxe model is rented for 75 percent.
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