Barclay Enterprises manufactures and sells three distinct styles of bicycles: the Youth model sells for $300 and has a unit contribution margin of $105; the Adult model sells for $850 and has a unit contribution margin of $450; and the Recreational model sells for $1,000 and has a unit contribution margin of $500. The company's sales mix includes: 5 Youth models; 9 Adult models; and 6 Recreational models. If the firm's annual fixed costs total $6,500,000, calculate the firm's break-even point in total sales dollars.
A) $13,250,000.
B) $13,000,000.
C) $12,750,000.
D) $12,900,050.
E) $12,750,625.
B) $13,000,000.
Contribution Margin Ratio per Composite Unit = $7,575 / $15,150
Contribution Margin Ratio per Composite Unit = 50%
Break-even Sales Dollars = Total Fixed Costs / Contribution Margin Ratio of Composite Unit
Break-even Sales Dollars = $6,500,000 / 50%
Break-even Sales Dollars = $13,000,000
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